Q1 2024 Grindr Inc Earnings Call
Operator: Welcome everyone to the Grindr Q1 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star two. Thank you. I would now like to turn the conference over to Tolu Adeofe, Grindr's Head of Investor Relations. Please go ahead.
Q1, 2024 earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Speaker Change: I would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
I would like to withdraw your question. Please press star two.
Speaker Change: I would now like to turn the conference over to tow Lou Adeel Fe Grinders head of Investor Relations. Please go ahead.
Speaker Change: Okay.
Speaker Change: Thank you moderator Hello, and welcome to the Grinder earnings call for the first quarter 2020 for today's call will be led by Greg <unk>, CEO, George Aronson, and CFO <unk> <unk>.
Tolu Adeofe: Thank you, moderator. Hello and welcome to the Grindr earnings call for Q1 2024. Today's call will be led by Grindr's CEO, George Arison, and CFO, Vanna Krantz. They will make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon, and this is available on the SEC's website and Grindr's investor page at investors.grindr.com. Before we begin, I will remind everyone that during this call we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate, or similar such statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC.
Speaker Change: They will make a few brief remarks, and then we'll open it up for questions.
Speaker Change: Please note grinder released its shareholder letter this afternoon.
Speaker Change: Available on the SEC website, and grinders investor page at investors <unk> Greenberg dotcom.
Speaker Change: Before we begin I will remind everyone that during this call we may discuss our outlook and future performance.
Speaker Change: These forward looking statements may be preceded by words, such as we expect we believe we anticipate or similar such statements.
Speaker Change: These statements are subject to risks and uncertainties and our actual results could differ materially from the views expressed today.
Speaker Change: Some of these risks have been set forth in our earnings release, and our periodic reports filed with the SEC.
During today's call. We will also present, both GAAP and non-GAAP financial measures.
Tolu Adeofe: During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures, are included in the earnings release we issued today, which has been posted on the investor relations page of Grindr's website and in Grindr's filings with the SEC. With that, I'll turn it over to George.
Speaker Change: Additional disclosures regarding non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures are included in the earnings release, we issued today, which has been posted on the Investor Relations page of Grinders website, and then Brian <unk> filings with the SEC.
George: With that I'll turn it over to George.
George: Thanks, Tony and Hello, everyone, We reported outstanding revenue growth with strong adjusted EBITDA in the first quarter.
George Arison: Thanks, Tolu, and hello everyone. We report outstanding revenue growth and strong adjusted EBITDA in Q1. User metrics and engagement were all healthy. Our overall Q1 performance reinforces our confidence in our full-year outlook. I'm grateful to our team for their hard work on some significant product launches and to our users for engaging with these launches and providing us important feedback quickly to allow us to make improvements. In addition to the terrific results, we have hit the ground running on our 2024 strategic priorities. These priorities are focused not only on driving continued growth this year, but also on positioning Grindr for the long-term success as a global Gayborhood in your pocket.
George: User metrics and engagement, we're all healthy.
George: Overall Q1 performance reinforces our confidence in our full year outlook.
George: I'm grateful to our team for their hard work on some significant product launches.
George: Users engaging with these launches and providing us important feedback quickly to allow us to make improvements.
George: In addition to the terrific results, we have to hit the ground running on our 2024 strategic priorities.
George: These priorities are focused not only on driving continued growth. This year, but also in positioning grinder with a long term success of the global Gayborhood in your pocket.
George: We're pursuing that vision by focusing on.
George Arison: We are pursuing that vision by focusing on, one, a robust set of products and features that focus on serving users' varying intents, two, a lean and nimble team with an exceptional performance-driven culture, and three, a brand narrative that is true to the important role we play in the community. Looking first at product development, we currently have two new features in test, Right Now and Roam, both of which are built with user intent in mind. Right Now is a multi-phase product we're building in response to strong user demand that makes it faster and easier for users to connect. Phase one features are currently in test, with more expected to be launched later this and next year. Right Now will ultimately have additional robust features facilitating better user engagement and capabilities for more seamless user communication between users, both one-on-one and in groups.
George: A robust set of products and features and focus on serving end users very intent to lean and nimble team with an exceptional performance driven culture and three.
George: Narrative that is true for the important role we play in the community.
George: First upon development. We currently have two usages in test right now in Rome.
George: Which are built with user intent in mind.
George: Right now as a multi phased product we're building in response to strong user demand and it makes it faster and easier for us to connect pays. One features are currently in test with more expected to be launched later this and next year right.
George: Right now what ultimately have additional robust features that's living better user engagement and capabilities for more seamless easy communication between users both one on one and in groups.
George: Well refer to California passed truckers to travel detention. This feature enables users to transport their profile into a different location that they will be traveling to making the profile discoverable by users and application.
George Arison: Roam, referred to as Teleport in the past, targets the travel intention. This feature enables users to transport their profile into a different location that they will be traveling to, making the profile discoverable by users in that location. We're currently planning to start rolling it out more broadly in H2 of the year. During Q1, we also rolled out our new chat system, built with an entirely new architecture, which encompasses step change improvements in this critical user feature. This was a complex technical undertaking, and we're nearing the finish line in addressing bugs that have popped up in the initial launch period. The new chat moves storage of chat server side, eliminating lost chats as a result of device changes. Fixing this was a top request from users for years. We are very excited to offer the significant UX upgrade to all users.
George: Planning to start rolling it out more broadly in the second half of the year.
George: During Q1, we also rolled out our new chat system.
George: And having a protection, which encompass a step change improvements in this critical user feature.
George: This was a complex technical undertaking and we're nearing the finish line and addressing bugs that have popped up in the initial launch period.
George: The chart in the storage of chat service side, eliminating loss charge as a result of the device changes.
George: Fixing this with a top requests from users for years, we are very excited to offer the significant UX upgrades to all users.
George: Uhm architecture will be foundational to several new intentionality focus speed features we plan to rollout in the coming quarters.
George Arison: New chat architecture will be foundational to several new intentionality-focused paid features we plan to roll out in the coming quarters. Turning to our team, we continue to build out our talent base, and we increased the number of engineers on board by more than 50% in Q1. As we think about long-term growth, we are centering on a vision of Grindr as a global Gayborhood in your pocket. Physical gayborhoods are hubs for the gay community, long established in large cities, where people can interact safely and comfortably with businesses, resources, bars, restaurants, and shops specifically catered to us. Over our 15-year history, Grindr has come to represent this concept in a digital way. We see this today in how the app is used for things like travel recommendations, health information, and making professional connections.
George: Turning to our team will continue to build out our talent base and we increase the number of engineers on board by more than 50% in Q1.
George: As we think about long term growth, we are centering on a vision of clients around the globe, Okay put in your pocket.
George: Is it okay, but hurts our hubs for the gay community long established do much cities, where people can interact safely and comfortably.
George: <unk> resources are some restaurants and shops, specifically cater to us.
George: Where our 15 year history Gardner has come to represent this concept in a digital way.
George: We see this today and how the App is used for things like travel and accommodations health information and making professional connections.
George: We know our users want other types of connections information until they will enhance their launch.
George Arison: We know our users want other types of connections, information, and services that will enhance their lives. Our vision of Grindr as the global Gayborhood is about tapping into these desires. It will be a multi-year journey to achieve this vision, but we're excited about the potential to make Grindr an even more integral part of the community and to build an even greater business in the process. I'm excited about sharing the long-term product roadmap that underlines the Gayborhood vision with you on our Investor Day in June. Thanks again for joining, and now I'll turn it over to Vanna to discuss the quarterly results in greater detail.
George: Quanta is the global Gayborhood is about tapping into these designs.
George: It will be a multiyear journey to achieve decision.
George: But the potential client or an even more integral part of the community.
George: To build an even greater business in the process.
George: I'm excited about sharing our long term product roadmap. It underlines I kept my vision with you at our Investor Day in June.
George: Thanks, again for joining and now I'll turn it over to Daniel to discuss the quarterly results.
George: Tim.
Daniel: Thank you George and Hello, everyone.
Vanna Krantz: Thank you, George, and hello everyone. Grindr is firing on all cylinders as we start off the year. Q1 revenue grew 35% year over year to $75.3 million, and adjusted EBITDA margin came in at 42%.
Daniel: <unk> is firing on all cylinders as we start off the year Q1 revenue increased 35% year over year to $75 3 million and adjusted EBIT margin came in at 42%.
Daniel: Q1 revenue was driven by strong sales across all products, including the extra weekly subscription which launched in mid 2023.
Vanna Krantz: Q1 revenue was driven by strong sales across all products, including the XTRA weekly subscription, which launched in mid-2023. Direct revenue increased 34% year-over-year to $64.4 million, indirect revenue was up 43% year-over-year to $11 million, as we benefit from reinstated banner advertising from Q2 2023. To share a few key user metrics, average monthly active users increased 7% over the prior year to 13.7 million. Average paying users in the quarter increased 17% over the prior year to 1 million, which brings payer penetration to 7.4% for the quarter. Our average direct revenue per paying user increased 15% over the prior year to $21.25 this quarter. Moving to expenses and profitability. Operating expenses, excluding the cost of revenue, were $36.5 million in Q1 2024, up 13% year-over-year. This reflects higher people costs driven by stock-based compensation and contractors, which was offset by lower depreciation.
Daniel: Direct revenue increased 34% year over year to $64 4 million and indirect revenue was up 43% year over year to $11 million as we benefit from reinstated banner advertising from Q2 of 2023 to.
Daniel: To share a few key user metrics.
Daniel: Average monthly active users increased 7% over the prior year to $13 7 million.
Daniel: Average paying users in the quarter increased 17% over the prior year to $1 million, which brings payer penetration to seven 4% for the quarter.
Daniel: And our average direct revenue per paying user increased 15% over the prior year to $21.25 this quarter.
Daniel: Moving to expenses and profitability.
Daniel: Operating expenses, excluding the cost of revenue were $36 5 million in Q1 of 2024 up 13% year over year.
Daniel: This reflects higher people costs, driven by stock based compensation and contractors, which was offset by lower depreciation.
Daniel: Adjusted EBITDA for Q1 of 2024 with $31 6 million equating to a 42% adjusted EBITDA margin up from $22 million, a year ago or 39% of revenue.
Vanna Krantz: Adjusted EBITDA for Q1 of 2024 was $31.6 million, equating to a 42% adjusted EBITDA margin, up from $22 million a year ago, or 39% of revenue. Turning to our balance sheet, we paid down $25.8 million of debt, bringing our debt position to $315 million as of 31 March 2024, and ended the quarter with $21.5 million in cash and cash equivalents. Lastly, I'll touch on how we're thinking about our 2024 outlook. We are pleased with the strong start to the year, which increases our confidence in the outlook for revenue growth of at least 23% and adjusted EBITDA margin of at least 40% for the year. We set and update our annual guidance based on our most current views of the business and what we know to be achievable.
Daniel: Turning to our balance sheet, we paid down $25 $8 million of debt, bringing our debt position to $315 million as of March 31, 2024 and ended the quarter with $21 5 million in cash and cash equivalents.
Daniel: Lastly, I'll touch on how we're thinking about our 2020 for outlook.
Daniel: We are pleased with the strong start to the year, which increases our confidence in the outlook for revenue growth of at least 23% and adjusted EBITDA margin of at least 40% for the year.
Daniel: We sat and update our annual guidance based on our most current deals at the business and what we know to be achievable.
Daniel: Q1 year over year revenue growth was largely driven by user adoption of the extra weekly subscription which was introduced in mid 2023.
Vanna Krantz: Q1 year-over-year revenue growth was largely driven by user adoption of the XTRA weekly subscription, which was introduced in mid-2023. We are currently testing new products and are encouraged by their potential and are still accumulating data that will inform the timing of global launch and revenue forecasting. With that, I'll ask the operator to open up the line for questions.
Daniel: We are currently testing new products and are encouraged by their potential.
Daniel: We're still accumulating data that will inform the timing of global launch and revenue forecasting.
Daniel: With that I'll ask the operator to open up the line for questions.
Daniel: At this time, if you would like to ask a question. Please press the star and one on your telephone keypad you may withdraw yourself from the queue at any time by pressing star two.
Operator: At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star two. We'll take our first question from Nicholas Jones with Citizens JMP. Your line is open.
Speaker Change: And we'll take our first question from Nick Jones with citizens J M P.
Daniel: Line is open.
Nick Jones: Great. Thanks for thanks for.
Nicholas Jones: Great. Thanks for taking the questions. Maybe first, increasing the engineer headcount by 50% sequentially and, with Right Now and Roam products rolling out, can you speak to how you think about, I guess, return on investment when you add engineers? You guys are a very product-driven company with a lot of enhancements to come. How do you think about kind of ratcheting up those hires and how we should be thinking about, I guess, the timeline or return on investment to those hires?
Daniel: Taking the question.
Daniel: Maybe first increasing to engineer head count by 50% sequentially and.
Daniel: Right now in the wrong products rolling out.
Daniel: Can you speak to how you think about I guess return on investment when you add engineers that you guys are very product driven company with a lot of enhancements to call. How do you think about kind of ratcheting up those hires and how we should be thinking about I guess, the timeline or a return on investment.
Daniel: Two of those hires.
Speaker Change: Thanks for being here and they've been great to talk to you. So I'll start and then I'll hand over to Dana.
George Arison: Thanks for being here, Nick. It's great to talk to you. I'll start and then I'll hand over to Vana. First, we had way more engineers than we have on board today at our peak in January 2023. We were close to 225 people in total, and a big portion, nearly half of that, was product and engineering team. As everyone knows, a lot of folks chose not to stay on Grindr with the culture change and cultural implementations that we wanted to make, which included coming back to the office. They chose to depart. We are at 129 people in total as of end of Q3, and so far from where we were at our peak. The engineers that we're adding are not even bringing us close to where we were in the past.
Speaker Change: First we had way more engineers than we'd have on board today at our peak in January of 2023 were close to 225 people in total and then the big portion nearly half of that was product and engineering team.
Speaker Change: As everyone knows.
Speaker Change: And our folks chose not to sound grinder.
Speaker Change: <unk> comes from implementations that we wanted to make which included coming back into the office and so they chose to depart and so we are.
Speaker Change: 102009 people in total as of end of Q3, and so far from where we were at our peak. So the engineers that were adding are not even bring us close to where we were in the past when I came to Brian My takeaway and this isn't I guess mine I think a lot of folks who are here are in leadership. Both had the same feeling is that we had opportunity to significant.
George Arison: When I came to Grindr, my takeaway, and this was not just mine, I think a lot of folks who were here in leadership roles had the same feeling, is that we had opportunity to significantly increase productivity. We were not shipping as many things as we could have been shipping. We, I think, achieved that in a pretty significant way, both last year and are continuing to see pretty significant productivity improvements this year. Obviously, some of that has to do with kind of having clarity on what you want to achieve, because I think engineers do really well when there's clarity around product vision and specifications. Some of this deal with better management, which we're implementing across the whole org, right? That's something that you have to do as the company matures.
Speaker Change: With increased productivity.
Speaker Change: Not shipping as many things as we could have been sitting.
Speaker Change: And we I think it's been a pretty significant way.
Speaker Change: Both last year and are continuing to see pretty significant productivity equipment. This year, obviously some of that has to do with kind.
Speaker Change: Kind of having clarity on what you want to achieve because I think continues to do really well then there's clarity around product vision and specifications and some of US do it with better management.
Speaker Change: Implementing across the whole walk right. That's something that you have to do is as the company matures and as far as how we tend to think about product development. We are in a very product driven company no question and.
George Arison: As far as how we tend to think about product development, we are a very product-driven company, no question. The way I think best product is built is through user perspective. If you go to our operating principles on our website, you'll see that the first principle is user number 1. There's a very clear reason why, right? We try to learn from users what they want and then try to build that for them. Does not mean you don't come into the product with a hypothesis. You definitely do. You start with the user in mind. We are fortunate that our users actually have told us a lot in terms of what they want.
Speaker Change: The way I think that product is built is through user perspective. So if you go to our operating principles on our website, you'll see that the first principle is either the number one.
Speaker Change: The very clear reason why we tried to learn from us and what they want and then try to build to that for them does not mean, you don't come into the product where the hypothesis you definitely do but you start with the user in mind.
Speaker Change: And we are fortunate that I, usually ask anyhow told us a lot in terms of what they want.
George Arison: They've been saying this for years, that they want certain things built and, Hey, when are you guys going to do that? We've been, I think, very deliberate in ensuring that we build those things for them. What we normally do is get that initial user perspective in terms of what they want, mock things up and design prototypes, and put those in front of the user, and collect feedback on that as well, make changes based on user feedback, and only then start actually building the product. At which point we have reasonably high confidence that something will work well.
Speaker Change: <unk> been saying this for four years that they want certain things built in hey, when are you guys going to do that and we've been I think very deliberate in ensuring that we build.
Speaker Change: Those before them what we normally do is kind of get that initial user perspective in terms of what they want mark things up and design prototypes and put those in front of the user.
Speaker Change: And collect feedback on that as well make changes based on user feedback and only then start actually building the product at which point, we have reasonably high confidence that something would work well we tried to build the most minimum viable product you can to address the user needs. That's my question I'll put that onto the market as quickly as possible because the best test for some exactly.
George Arison: We try to build the most minimum viable product we can to address the user need that's in question, put that onto the market as quickly as possible, because the best test for something is actually having users work with or play with a product that you have out there and start collecting feedback. That's something we did, for example, last year with Roam. We put the first version of Roam out in the fall, in a couple of countries with a select set of users, collected feedback, took that feedback in from the real product being live in market, and then made changes to it, and then put it out there again last quarter. That's the general approach that we take with the product development.
Speaker Change: Users, who work where they'll play with a product that you have out there and start collecting feedback that's something we did for example last year what went wrong right. We put the first vision algorithm out in in the fall.
Speaker Change: And a couple of countries with a select set of users collected feedback took that feedback and from the reveal product alignment market and then made changes to it and then put it out there again.
Speaker Change: Last quarter. So that's the general approach that we take with the product development.
George Arison: We definitely have more to do than we have resources to do with in a pretty significant way, and that's why we said that we would expect that over a two-year period, we would build back up to at least the levels of total number of hires that we had, or total number of team members that we had in the beginning of 2023.
Speaker Change: We definitely have more to do than we have resources to deal with in a pretty significant way and that's why we said that we would expect that over a two year period, we would build back up to at least the levels of the total number of higher that we had a number of team members that we had in the beginning of 2023.
Matt: And just to address Hey, Matt kind of how are you.
Vanna Krantz: Hey, Nick. How are you? We are thinking about our investments with respect to the overall envelope that we've set in terms of our guidance of 40%. Everything that we are talking about, you should expect that is already factored into the guidance that we've shared with you, and that really is the investment that we need to put into our business to continue the growth in the short and medium term. Yes, it sounds like a big change with respect to 50% increase in engineering headcount, but as you know, we were at 104 total FTEs at Q4, and now we're at 129. Still a relatively lean company for the amount of product that we have out there and our goals.
Speaker Change: We are.
Speaker Change: Our thinking about our investments with respect to the overall envelope that we sat in terms of our guidance of 40%. So everything that we're talking about you should expect that is already factored into the guidance that we shared with you and that really is the investment that we need to put into our business.
Speaker Change: Continue the growth in the short and medium term and so on.
Speaker Change: Yes, it sounds like a big change with respect to 50% increase in engineering headcount, but as you know we were at 104 total Ftes at Q4 and now we're at 129, so still still a relatively new company for the amount of product that we have out there and articles.
Nicholas Jones: Great. Maybe still staying on the theme of product roll-outs. There's a limited weekly roll-out globally in Q1. You mentioned the XTRA that was rolled out in Q2 last year. Payer penetration, the percent of MAUs ticked up nicely in Q1. Can you speak to the product roll-outs obviously help attract more payers, but to the extent that users are having a better experience, is that also showing up in just maybe MAUs who aren't quite ready to pay? I guess, could you walk through, as you roll these out, what is the impact on payers, and I guess even further up the funnel and just overall usage of the platform?
Speaker Change: Great and maybe its still staying on the theme of product rollout Theres Unlimited weekly.
Speaker Change: While our globally in Q1, you mentioned the extra that was rolled out last year.
Speaker Change: Payer penetration as a percent of EMEA is picked up nicely I want to can you speak to kind of.
Speaker Change: The product rollout, obviously help attract more payers.
Speaker Change: But to the extent that you.
Speaker Change: Users are having a better experience that also showing up and just maybe Emma Xu who are quite ready to pay I guess could you kind of walk through as you roll. These out what is kind of the impact on payers and I guess, even further up the funnel just overall usage of the platform.
Vanna Krantz: Hey, Nick, maybe I could just start. We actually did not roll out the Grindr Unlimited. It is only in test. It's not fully rolled out globally. It's still in test. What you can imagine is that it only went out in April. This was the Q1 results that you're looking at, and the test part was still in March. I would say that we're very pleased with our growth rate in average paying users, which was 17%. We're pleased with the ARPU changes, which is really an output of getting more and more paying users. The MAU continues to grow. I think you could see that we're up by 7% in terms of year over year.
Speaker Change: And if maybe I could just start so we actually did not roll out the unlimited weekly there's only in test and so it's not fully rolled out globally, it's still intact and so you can imagine is that.
Speaker Change: <unk>.
Speaker Change: It's it hasn't it only went out in April and so.
Speaker Change: This was the Q1 results that you're looking at and the test part with fill in in March and so I would say that we're very pleased with our growth rate in average paying users, which was 17%. We're pleased with the ARPA changes, which is really an output of getting more and more paying users and <unk>.
Speaker Change: <unk> continues to grow I think you could see it where were up by 7% in terms of year over year. So we are having a steady drumbeat of bringing more and more monthly active users globally into the platform and increasing our average paying users through our build out of the product roadmap.
Vanna Krantz: We are having a steady drumbeat of bringing more and more monthly active users globally into the platform and increasing our average paying users through our build-out of the product roadmap. It's global, both domestic and international, and it's really a drumbeat of continuously tweaking our products and getting more users out there.
Speaker Change: Global both domestic and international and it it's really a drumbeat.
Speaker Change: Continuously tweaking our projects and getting more users out there.
George Arison: I think to what are the products that we're building and where are they going. First of all, we have Investor Day coming up in June, and so really excited to have everyone there. I think we'll do a fairly detailed look into what the product roadmap is and what are the things that we will be launching and how that interrelates to the growth that we're planning from the revenue perspective. Please stay tuned to that, and I'm really looking forward to telling everybody what we're going to be doing. That said, the way we have been thinking about product development overall is both in creating products that will drive monetization and also building things for the entire user base, even if those users are not paying customers, because obviously they are very valuable users as well.
Speaker Change: And I think to kind of.
Speaker Change: What are the products that we're building and where they're going so first of all we have investor day coming up in June and so really excited to have everyone. There and I think we'll do a fairly detailed look into what the protocol is and what are the things that we will be launching and how that relates to the growth that we're planning from the revenue perspective, and so please stay tuned to that and I'm.
Speaker Change: Really looking forward to cut.
Speaker Change: Everybody, what we're going to be doing.
Speaker Change: That said we.
Speaker Change: We.
Speaker Change: I have been thinking about product development overall is both in creating products that will drive monetization and also building things for the entire user base. Even if those are not paying customers. Because obviously they are very valuable either well be one of our Korean customers engaging with people who are not paying customers and so you want to go.
George Arison: You want our paying customers engaging with people who are not paying customers, and so you want both. From that perspective, for example, this past quarter, we released a huge update to our chat system. It's a completely new architecture in our chat system, a very significant launch, the most challenging technical launch the company's done in nearly a decade, and that's obviously for everybody. Now, we do envision that with that architectural change, we will be actually able to launch new features inside our inbox that will be specific for paying customers and will be an opportunity to convert more people to become paying customers. When we think about product development, we think about it from both attracting new users to the product or maybe users who used the product before and are using it less now because they were not getting what they wanted from that product.
Speaker Change: From that perspective for example.
Speaker Change: A quarter.
Speaker Change: Quarter, we released.
Speaker Change: A huge update to our chat system is a completely new architecture.
Speaker Change: In our system are very significant launch the most challenged it's definitely much the company has done in nearly a decade and Thats. Obviously for everybody now we do envision that with that architectural change we will be actually able to launch new features inside our inbox there'll be specific for paying customers and will be an opportunity to convert.
Speaker Change: More people to become paying customers. So when we think about product development as we kind of think about it from both.
Speaker Change: Attracting new users to the product or maybe users who use the product before and are using it less now because we're not getting what they want it when that product. That's an example of for example, what dating features that might do for us.
George Arison: That's an example of, for example, what dating features might do for us, as well as from the perspective of then taking those users or existing users and converting them to be paying customers.
Speaker Change: As well as from the perspective of then taking those users or existing users and converting them to be bank customers.
Nicholas Jones: Great. If I could sneak in one last question here, then I'll hop back in the queue.
Speaker Change: Great if I could sneak one last question here and then I'll hop back in Brazil.
George Arison: Sure.
Speaker Change: Sure.
Nicholas Jones: In a slide deck you guys put out earlier in the year, I think it was about 25% of MAUs are in the US, roughly, but your revenue in the US is quite a bit higher than that. Could you speak to, I guess, your ability to monetize so well in the US, and maybe what it takes to get similar monetization in some of the international markets, or what the puts and takes are to monetization internationally versus in the US? Maybe I have this wrong, and you could just help clarify. Thanks.
Speaker Change: A slide deck, you guys put out earlier in the year I think it was about 25% of many years.
Speaker Change: Or in the U S.
Speaker Change: Roughly but.
Speaker Change: Your revenue in the U S is quite a bit higher than that so could you speak to I guess your ability to monetize so while in the U S.
Speaker Change: And maybe what it takes to kind of get similar monetization and some of the international markets are what the puts and takes are.
Speaker Change: Through monetization internationally versus in the U S.
Speaker Change: I have this wrong and you could just help clarify thanks.
George Arison: Sounds good, Nick. Yes, you're right. We have about a quarter, a third. We're nicely global in terms of our monthly active users with North America versus all the other regions. Absolutely true. From a revenue perspective, think of it of around 40% of our revenue is coming outside of North America. Clearly that's giving you an indication that we are further along in terms of not only payer penetration, but obviously conversion as well in terms of North America versus the other regions. I think what you can also take from that is that we put out a product, and we put it out globally. We do a global launch, for instance, of the weeklies with some level of localization, but quite minimal.
Speaker Change: Okay sounds good next yes, you're right we have about a quarter a third but yeah. We're nicely global in terms of our monthly active users with North America versus all the other regions.
Speaker Change: Absolutely true from a revenue perspective think of it of around 40% of our revenue is coming outside of North America.
Speaker Change: Clearly that's giving.
Speaker Change: Giving you an indication that we are further along in terms of not only payer penetration, but obviously conversion as well in terms of north.
Speaker Change: North America versus the other regions I think what you can also take from that is that we put out a product and we put it out globally. So we do a global launch for instance of the weeklies with some level of localization, but quite minimal and I think that we are continually testing how our products are.
George Arison: I think that we are continually testing how our products are landing in certain international markets, and we will continue on our localization efforts to increase the conversion rates internationally. I would say that we're still early in that journey, but what's pretty comforting is that even with a global rollout, for instance, the extra weeklies, like you noted, they still perform very well globally. Nick, I just view all that as a massive opportunity, right? The fact that we are penetrating well in the US but are still, I think, below our peers in the dating space is a great opportunity to continue increasing payer penetration in the US. The fact that rest of the world, Europe, Latin America, Asia, are below North America in payer penetration, I think it tells you that over time you can drive that payer penetration to be higher as well.
Speaker Change: Randy.
Speaker Change: Certain international markets, and we will continue on our localization localization efforts to increase the conversion rates internationally I would say that we're still early in that journey, but what.
Speaker Change: Hum.
Speaker Change: Comforting is that even with a global rollout for.
Speaker Change: For instance, the extra week leaves like you noted they still performed very well globally.
Speaker Change: And then I guess do all of that is a massive opportunity right.
Fact that we are penetrating well in the U S, but are still being below our peers in the dating space is a great opportunity to continue increasing penetration in the U S and the fact that.
Speaker Change: The World Europe, Latin America, Asia or below North America in penetration I think it tells you that over time, you can drive that penetration to be higher as well.
George Arison: We've never really approached this business from a regional perspective. That's something we're just now starting to think about as Vandana mentioned from a localization perspective. I think that'll be really helpful. There's also a factor of cultural changes, right? US and Europe in particular are probably furthest along in acceptance of gay rights, and that makes it easier for people to be paying for a product like us. That change is happening very actively in Latin America. We were just in Brazil a few weeks ago, and the response to us being there and speaking was extremely positive. I think there's a ton of opportunity in Latin America from that perspective. In Asia, where probably the pace of change culturally is the slowest right now, you are still seeing some significant changes happen, right?
Speaker Change: Never really approached this business from a regional perspective.
Speaker Change: We're just now starting to think demand is.
And then an issue from a localization perspective.
Speaker Change: And we.
Speaker Change: Really helpful.
Speaker Change: And that's.
Speaker Change: After a kind of cultural changes right.
Speaker Change: U S and Europe in particular are probably furthest along in acceptance of gay rights and that makes it easier for people to pay for a product like ours that changes happening very actively in Latin America, we were just in Argentina.
Speaker Change: In Brazil, a few weeks ago and.
Speaker Change: The response to being there and speaking with extremely positive and so I think there's a ton of opportunity in Latin America from that perspective, and then in Asia, We're probably the pace of change culturally the slowest right. Now you are still seeing some significant changes my Thailand is very actively working on passing on marriage equality.
George Arison: Thailand is very actively working on passing marriage equality as a law. That's really positive as well. I think we have a ton of opportunity to see payer penetration grow all over the world. Obviously, it's going to be a long journey, right? Because we have a lot of room to grow, but we plan to take advantage of that.
Speaker Change: It is the law and so that's really positive as well. So I think we have a ton of opportunity.
Speaker Change: To see penetration grow all over the world, obviously, they're going to be a long journey right. Because we have a lot of room to grow but we plan to take advantage of that.
Nicholas Jones: Great. Thanks, George. Thanks, Vandana.
Speaker Change: Okay. Thanks chart to think about it.
Operator: We'll move next to Andrew Marok with Raymond James. Your line is open.
Speaker Change: And well move next to Andrew Baroque with Raymond James Your line is open.
Andrew Marok: Hi. Thanks again for taking my questions. Wanted to talk about the Right Now launch. Seems like a pretty interesting product and fairly differentiated in the marketplace. You talked about user feedback or user signals on intent that went into the development of that product. Can you maybe go a second level below and say what was it among the user base that said, This is the product that we need to serve this unmet desire in our user base?
Andrew Baroque: Thanks again for taking my questions I wanted to talk about the right now launch.
Speaker Change: It seems like a pretty interesting product and fairly differentiated in the marketplace, you talked about user feedback or or user signaled an intent that went into the development of that product can you. Maybe go a second level below and say what was among the user base that said this is the product that we need to serve.
Speaker Change: This unmet desire and our user base.
George Arison: Absolutely. Happy to talk about that and good to talk to you, Andrew. I think the way I would think about this is the following: when Grindr started out as a company in its earliest days, everyone who was on Grindr kind of thought of it as a Right Now product. That was kind of the reason you were there, right? It obviously was both online and in some ways was going directly offline as well, which I think is a huge differentiator of Grindr.
Speaker Change: Absolutely happy to talk about that and good to talk to you Andrew So I think the way I would.
Speaker Change: <unk> is the following when going to started out as a company in its earliest days everyone, who was on greiner kind of thought of it as of right now product that was kind of the reason you are there right and.
Speaker Change: Obviously with both online and in some ways, we're going directly offline as well and we can see with huge differentiator of minor I mean, I can tell you my own personal story, how I learned about going nowhere I wasn't in a bar with a bunch of my friends and and one of them pulled out his iPhone.
George Arison: I mean, I can tell you my own personal story, how I learned about Grindr, where I was in a bar with a bunch of my friends, and one of them pulled out his iPhone, and he's like, Hey, let me tell you about this cool app I just discovered. Goes into Grindr, and literally, I think 20 people in the bar were all on the app at the same time. The Right Now mode was kind of there for everybody at that point. Now, over time, as the user base grew, and obviously it grew very, very quickly to much larger numbers, many other use cases came into the product.
Speaker Change: And Hey, let me tell you about this core by I think it was discovered goes into grinder and.
Speaker Change: 20 people in the borrower all of them out but at the same time so.
Speaker Change: That was in the right non mode for.
Speaker Change: For everybody at that point.
Speaker Change: With time as the user base grew and obviously grew very very quickly to much larger numbers.
Speaker Change: Many other use cases came into the product. So we went from right now use case to people looking for it for daily to people looking for friends to people looking for social connection and even professional connections looking for information and access that information as it related to travel or health.
George Arison: We went from Right Now use case to people looking for dating, to people looking for friends, to people looking for social connections, and even professional connections, looking for information and access to that information as related to travel or health, et cetera. Not everybody is in the same mode of intentions at any given moment. Frankly, people can be in more than one mode of intentions at the same time, right? What we are hearing from users is it'd be great if we could have a way to know who is in the Right Now mode when we are talking to them. We heard that loud and clear from users, and that's what we are building. Now, Right Now, what we've launched so far is not the completed product.
Speaker Change: And so not everybody is in the same mode of intentions at any given moment and frankly looking in more than one mode of intention at the same time.
Speaker Change: So what we are hearing from you that it would be great. If we could have a way to know who is in the right now mode. When we are talking to them and we heard that loud and clear from users.
Speaker Change: What we are building now right now isn't it.
Speaker Change: We've launched so far is not the completed product and when I say launched it it's in test in one country right. So that's kind of the phase where we are at right. Now. This is the first test.
George Arison: By the way, when I say launched it's in test in one country, right? That's kind of the phase what we are at right now. This is the first test of this. We are collecting user feedback. We're going to take that feedback and then make changes to the feature and get it back out into users for testing purposes. This is a multi-step process, but it's still phase one of what we want to do. What we've released is a toggle on your profile that allows you to say you're in the Right Now mode, and then people are able to sort the grid based on who is in the Right Now mode. Over time, we see opportunity for a lot more features that are tied to that mode.
Speaker Change: We are collecting user feedback and take that feedback and then.
Speaker Change: Make changes to the feature and kind of get it back out into use it for tax purposes. So this is a multi step process, but it's still phase one of what we wanted to do what we've released at Otago on your profile that allows you to say you are in the right mode.
Speaker Change: Then.
Speaker Change: We are able to sort.
Speaker Change: The grid based on who is in the right non mode over time, we see opportunity for a lot more features that are tied to that mode. It could be creating a mini person chat.
George Arison: It could be creating a many-person chat facility or a room where people could be talking to each other who are all in that mode. It could be additional toggles on the profile. It might even be that the profile looks a little bit different if you're in the Right Now mode. There's many different things that we are considering adding to this broad product feature set, and over time, we think it'll be a pretty significant extension of the product. I do want to say this second thing, which is not related to Right Now per se, but in terms of how we're thinking about the product. Right Now is one mode and one end of the things that we're looking to add. On the other end, we're thinking about dating the same way, right? We want to extend the product to have a feature set for dating.
Speaker Change: Facility or rooms, where people could be talking to each other who are all in that mode.
Speaker Change: It could be additional <unk> on our profile it might even be that the profile looks a little bit different if you're on the right in that mode.
Speaker Change: Many different things that we are considering.
Speaker Change: Adding to this broad product feature set and we know over time, we think it'll be a pretty significant extension of.
Speaker Change: On the product.
Speaker Change: Im going to say the second thing, which is not related to right now per se, but in terms of how we're thinking about the product right. Now is kind of one mode. In one end of the things that we're looking to add on the other end where thinking about data. The same way right. We wanted to extend the product to have that feature set for dating that's something also we've heard very actively from users people are saying.
George Arison: That's something also we've heard very actively from users. People are saying, We actually have a lot of success in finding long-term partners on Grindr. The numbers are very high, and we're very excited about that. It would be great if you had a feature set that allowed us to more easily connect with people who are in that mode, who actually want to be in a long-term relationship. Given the fact that we have users who are already in a relationship on the app and are not looking for a relationship, for example, that's a different segment of users versus the ones that might be actively looking for a relationship. Creating a segmentation for them to be able to talk to people who are in the dating use case is another thing we very much want to do.
Speaker Change: We actually have a lot of success in finding long term partners on grinder.
Speaker Change: The number that are very high and we're very excited about that.
Speaker Change: It would be great. If you had a feature set that allowed us to more easily connect with people who are in that mode, who actually want to be long term relationship.
Speaker Change: So given the fact that we have users who are already relationship on the up and are not looking for a relationship. For example, that's a different segment of users versus ones that might be actually looking for relationships, so creating a segmentation for them to kind of be able to talk to people who are in the dating use cases.
George Arison: None of this is going to change the main grid. The main grid's going to stay as it is. That's like bread and butter of the business and we think is extremely valuable. Building out these extensions into different directions we think is a huge opportunity, and that's what we are working on today.
Speaker Change: I think we very much wanted to do so.
Speaker Change: None of this is going to change the main red was going to stay as it is that's like bread and butter of the business and we think is extremely valuable but building out these extensions in two different directions with being as a huge opportunity and that's what we're working on today.
Andrew Marok: Really appreciate the detail and looking forward to future evolutions of that product. Maybe one quick one for Vanna Krantz, if I could? You mentioned the reinstatement of banner ads driving that spike up in the pace of indirect revenue growth. I guess, should the Q1 results be seen as the run rate going forward? Any other detail as to the scale of the move that you recently made would be appreciated. Thank you.
Speaker Change: Really appreciate the detail and looking forward to to kind of future evolutions of that product and then maybe one quick one for you you mentioned.
Speaker Change: Statement of banner banner ads driving that spike up in the pace of indoor.
Speaker Change: Indirect revenue growth I guess as to the <unk> results kind of be seen as the run rate going forward and any other kind of detail as to the scale of moves that you recently made would be appreciated. Thanks.
Vanna Krantz: Yes, Andrew, we are definitely off to a strong start this quarter across all of our business lines, and we did reintroduce that banner in the middle of 2023, so we are seeing the impact of it. What I'd suggest is that our advertising revenue is around 14% of our total revenue, and we can imagine that composition of total revenue will stay around the same. I think you should think about it in that manner.
Speaker Change: So yes, Andrew we are definitely off to a strong start this quarter across all of our business lines and we did reintroduced that banner in the middle of 2023. So we are seeing the impact of it.
Speaker Change: What I'd suggest is that right.
Speaker Change: Advertising revenue was around 14% of our total revenue and we can imagine that that composition of total revenue will stay around the same. So I think you should think about it in that manner.
Andrew Marok: All right. I appreciate the color. Thanks.
Speaker Change: Alright, I appreciate the color. Thanks.
Operator: We'll move next to John Blackledge with TD Cowen. Your line is open.
Speaker Change: Okay.
Speaker Change: Next to John Blackledge with TD Cowen Your line is open.
Logan Whalley: Hi there, it's Logan on for John. Thanks for the question. Had two questions here. Firstly, revenue growth was strong once again, Q1. How should we expect revenue growth to trend through the rest of the year as you lap through the weeklies launch in 2023, but also have new products launching alongside this new weekly unlimited tier?
Speaker Change: Yeah.
Logan: Either it's Logan on for John Thanks.
Speaker Change: Thanks for the question.
Speaker Change: Two questions here firstly.
Speaker Change: Growth was strong once again <unk>.
Speaker Change: How should we expect revenue growth to trend through the rest of the year as as you lap through like the weeklies launch in 'twenty three.
Speaker Change: But also have new products launching alongside this this new weekly unlimited tier.
Vanna Krantz: Yes, thanks. We had definitely a strong year so far, and we're really looking forward to a full year of great revenue growth. As you know, we've guided to 23%, at least 23%. That said, our philosophy on guidance is to inform the market based on things that we have visibility on. Right now, we are running tests across our subscription products, our à la carte offerings, and our advertising formats. All those tests are going well, and the results might impact our forecasts. As we get more learnings back, it's still relatively early in all of these tests, we'll update the market.
Speaker Change: Yes. Thanks.
Speaker Change: <unk> had a definitely a strong year.
Speaker Change: So far and are really looking forward to a full year of great. Great revenue growth as you know we've guided to 23% at least 23% and that's at our philosophy on guidance is to inform the market based on things that we have visibility on and right. Now we are running tests across our subscription products, our ala carte offerings and our.
Speaker Change: Advertising format.
Speaker Change: All those tests are going well and the result might impact our forecast and so as we get more learnings back it's still relatively early and all of these tests will update the market.
Vanna Krantz: You might recall that last year when we put out our guidance, we waited until we had the full impact of our testing with respect to understanding cannibalization, with respect to understanding sign-up growth, and then we started providing the updates to the market. I think we prefer to keep our philosophy and really having clear line of sight.
Speaker Change: You might recall that last year, when they put out earning our cards when they put out our guidance.
Speaker Change: We waited until we had the full impact of our testing with respect to understanding cannibalization with respect to understanding sign up growth.
Speaker Change: And when we started providing the updates to the market. So I think we prefer to keep our philosophy and really having clear line of sight.
Logan Whalley: Okay. Just on marketing spend continues to be minimal for you. Could you just update us on your philosophy with respect to marketing spend and also the results of the podcast and other brand marketing focuses for you guys right now?
Speaker Change: Yeah.
Speaker Change: Okay, and then just on marketing the marketing spend continues to be minimal for you could you just update us on your philosophy with respect to your marketing spend and also the results of the podcast and other brand marketing.
George Arison: Totally. Historically, Grindr's marketed very little. Maybe in the early days, they did a little bit more, then was almost no marketing when we came in. In some respects, we were successful in spite of our marketing rather than because of it. We were not telling our story very well. Grindr does awesome things for the community, for its users, and historically, even in recent history, telling that story and that narrative around the brand was not a focus. In product marketing as well, when you go into our app, we can do, and we will be doing a much better job in telling the narrative behind what the features are, how you use them, what benefits you get from them, et cetera. There's a ton of opportunity on the marketing side.
Speaker Change: Fox is for you guys right now.
Speaker Change: Totally so.
Speaker Change: Historically, our marketed very little maybe in the early days it is a little bit more than we've got almost no marketing when we came in and in some respects we are successful.
Speaker Change: In spite of our marketing rather than because of it.
Speaker Change: We're not telling our story very.
Speaker Change: Very very well grinder doesn't awesome things for the community.
Speaker Change: For its users.
Speaker Change: And historically, even in recent history kind of telling that story and that narrative around the brand.
Speaker Change: That focus and product marketing as well.
Speaker Change: Can you go into our App like we can do it and we will be doing a much better job in telling the narrative behind what the features are how you use them what benefits you get from them et cetera, So there's a ton of opportunity.
George Arison: Last year, we brought on board a new leader for our marketing and communication efforts who is a person named Tristan, who's a member of the community, has been an app user historically, has an incredibly good sense of the user. Also has worked both in the United States and in Europe, so brings an international perspective to things as well, which we think is really valuable. With Tristan's leadership, I think we're significantly up-leveling our marketing capabilities. A lot of that has already started to bear fruit. We spoke in the shareholder about the podcast that we ran in the first few months, which had incredible response from users and became a thing in the community in a really positive way.
Speaker Change: On the marketing side last year, we brought onboard a new leader for our marketing and communicating that principle was a plus.
Speaker Change: There was an interest in with a member of the community has been an app user historically.
Speaker Change: <unk> good sense of the user.
Speaker Change: And also has worked both in United States and in Europe. So brings an international perspective to things as long as we can we think is going to be valuable and so with recent leadership I think we are significantly up leveling our marketing capabilities. A lot of that has already started to bear fruit, we spoken the shareholder about the.
Speaker Change: The <unk> test that we ran in the first few months.
Speaker Change: Incredible response from users and became a thing in the community and in a really positive way.
George Arison: When you think about the total amount of money that that cost versus the engagement levels that you got from users, the ROI was extremely high. Another thing we're thinking about that's going to start in the next few weeks, in celebration of our 15th-year anniversary, we are going to be launching a bus tour across the United States. This is a Grindr bus that's going to go to 10 different cities across the country and have these really major marketing moments for Grindr during the month of June. Obviously, June is Pride Month, and so there are big Pride events all around the country. As you can imagine, Grindr is a very heavily used product during those events.
Speaker Change: And when you think about the total amount of money that that cost versus the engagement levels that you got from users. The ROI was extremely high and so another thing we're thinking about that's going to start in the next step.
Speaker Change: A few weeks in celebration of our 15th year anniversary.
Speaker Change: We are going to be launching a bus.
Speaker Change: Tour across the United States.
Speaker Change: This is a grind of us.
Speaker Change: That's going to go to 10 different cities across the country and have these like really major marketing movement for grinder.
Speaker Change: During the month of June obviously June is pride month, and so the big point events around the country and as you can imagine granted a very heavily used product during those.
George Arison: Again, that is going to be a reasonable investment, but the ROI you are going to get from that, we believe from engagement with the users, is going to be really significant. We had a little taste of that in Rio, when we were there for to give a speech and then started to do this fireside chat about the 15th anniversary. We also had a version of the bus there. The lines to get into it were completely unimaginable. I thought maybe 20 people would be in line when it was tens or maybe even hundreds of people in line waiting to get in. They had to call out security to manage the crowd. Those are the kinds of things we are doing in brand to help tell our story really well and really control the brand narrative, right?
Speaker Change: And so again that is going to be a reasonable investment, but the ROI youre going to get from that we believe whom engagement with us is going to be really really significant.
Speaker Change: A little taste of that in Rio when we were therefore to give a speech and then.
Speaker Change: Hard to do this as a fireside chat about.
Speaker Change: Anniversary and then we also had a conversion of the bus.
Speaker Change: Sure.
Speaker Change: Lines to get into at work completely unimagined like maybe 20 people would be in line with like 10 event.
Speaker Change: 100 people in line waiting to get in they had to call out security to manage that the crowd and so those are the kinds of things. We are doing in brand to help tell our story really well and really control the brand narrative right because for better fourth going to it does attract a lot of attention and a lot more than other products.
George Arison: Because for better or for worse, Grindr does attract a lot of attention, a lot more than other products. That attention can be good if it's channeled in a positive way around the things that we do really well, but it can be damaging when people try to make things that are not a big deal into a much bigger deal. We want to be owning the brand narrative and helping users understand, and all stakeholders understand, what Grindr does and how does it service the community.
Speaker Change: And that attention can be good it's channeled in a positive way around what we do really well, but it can be damaging when people try to make things that are not a big deal into a much bigger deal and so we want to be owning the brand narrative and helping us understand and all stakeholders understand well run it doesn't and how that could service the community.
Logan Whalley: Great. Thanks.
Operator: We'll move next to Rohit Kulkarni with Roth MKM. Your line is open.
Speaker Change: Alright. Thanks.
Speaker Change: Okay.
Speaker Change: And well move next to Rohit Kulkarni with Ross and Ken Your line is open.
Rohit Kulkarni: Hey, thank you. Nice quarter. Well said everything. A couple questions, quick picture ones for you, George. I guess, how are you thinking about AI and AI-driven use cases? You mentioned chats. You have rebuilt the infrastructure. Maybe talk about what use cases you think you could unlock even more and perhaps accompanying investments that you may have to do to make those use cases a reality. Yeah, I have a couple of the follow-ups on the model too.
Speaker Change: Thank you.
Speaker Change: My father in law.
Speaker Change: Instead of a thing.
Speaker Change: Quick question particular ones for your job shops.
Speaker Change: How are you thinking about.
Speaker Change: Yeah, driven use cases, you mentioned, Chad so and you rebuild the infrastructure.
Speaker Change: Let me talk about.
Speaker Change: What use cases, you think you could unlock even more and perhaps accompanying.
Speaker Change: Investments that you may have to do to make those use cases with reality.
George Arison: Sure. Good to talk to you. It's a great question. Bear with me as I answer it because I have a lot of thoughts on this. When we think about AI, there's both the user perspective in terms of what we're doing for the user and also how we run the company and how we actually build product that's interrelated to that as well, right? Because the changes that are happening, thanks to generative AI, in how code is written, for example, are incredible. I had a demo, for example, of a product this week, in which an AI synthetic computer is basically operating at the same level as you would expect a junior or senior year intern software engineer to operate. That's pretty incredible, right, in terms of how much effectiveness it's going to add to an engineer's productivity.
Speaker Change: Then I have a couple of follow ups on the mortgages.
Speaker Change: Sure good to talk to your Great question, So bear with me as I answer it because I have a lot of thoughts on this so when we think about AI and at both the user perspective in terms of what we're doing for the user and also how we run the company and how we actually built product that is related to that as well right because the changes in our <unk>.
Speaker Change: <unk>. Thanks generally in how code is written for example are incredible I had a demo for example of a product.
Speaker Change: This week in which.
Speaker Change: NII.
Speaker Change: Synthetic computer is basically operating at the same level as you would expect a junior or senior year in turn.
Speaker Change: Software engineer to operate and that's pretty incredible in terms of how much effectiveness, that's going to add two to an engineer's productivity now we're not fully there yet, but we're heading that direction. So the way we tend to think of it in the following way.
George Arison: We're not fully there yet, but we're headed in that direction. The way we tend to think of this is in the following way. Right now, we believe software in general, software development and products themselves are in the same stage, that in early days of cell phones, we were in cell phones versus landlines. You could go off and do a lot more investment into landlines, right. Because that's what was present then as the main way of communication. You could say, Hey, no, actually, I'm going to go invest in software, sorry, in cell phones and build a cell phone-driven environment first. For example, in places there might not be good connectivity on landlines. That's the kind of decision we need to make as well as we think about building products.
Speaker Change: Right now we believe software in general software development and product themselves are in the same stage kind of in early days of cellphones, we were in cell phones versus.
Speaker Change: Landlines and.
Speaker Change: And you could go after and kind of do a lot more investment into Landlines right. Because that's what was present Len is the main way of communication are you could say hey, no actually I'm going to go invest in software.
Speaker Change: In cell phone and build a cellphone driven environment first for example in places that we might be might not be good connectivity.
Speaker Change: And so that's the kind of decision we need to meet.
George Arison: When we think about dating, for example, the way we're approaching this, hey, what is the AI-first-based dating product like, rather than what is popular today in dating, and do we try to replicate and mimic that in our application? Because again, we don't have dating features. I think the former is a much better approach because that's where everybody else is going to go. Since we have an opportunity to build from scratch, let's build for that future, rather than what might be working today. That's how we tend to think about it. Where I think applications for AI are significant in our product, it's mainly threefold. One has to do with communications, chatting, companionship, or support for the user, whether it's coaching or mental health in either direction.
Speaker Change: Well as we think about building products. So when we think about data and for example, what we.
Speaker Change: The way we are pushing to pay what is the AI first.
Speaker Change: Base dating product lines, rather than what is popular today in dating and do we try to replicate and mimic that and our application because again, we don't have dating features I think that forms a much better approach because thats, where everybody else is going to go and so since we have an opportunity to build from scratch, let's build for the future rather than what might be.
Speaker Change: Working today.
Speaker Change: And that's how we tend to think about it. So we're I think applications for AAR significantly in our product. Many threefold one has to deal with it.
Speaker Change: Communications chatting companionship.
Speaker Change: Our support for the user whether it's.
George Arison: That whole bucket of communications generative component, I think is pretty significant, and there's a lot we can do there, and we're working on that. The second one is around matching and creating better connections between users. We have an incredible amount of information about our users. As you probably know, our users generated 121 billion chat messages last year. That's an incredible amount of information about what they like, what they don't like, what they're into. Using all that as a way to understand the user better and potentially create good matches between users, we think is a huge opportunity. That's the second component. Then thirdly is application health or app quality, trust and safety is another big component. There we're already actually doing a bunch of things using AI, and we think we can improve.
Speaker Change: Coaching or mental health in every direction that kind of a whole bucket of communications.
Speaker Change: General component I think is pretty significant in and there's a lot. We can do there and we're working on that the second one is around matching and creating better connections between us we have an incredible amount of information about our users as.
Speaker Change: You probably know argue that generate generated 121 billion chat messages last year, that's an incredible amount of information about what they like what they don't like what they are into and using all of that as a way to.
Speaker Change: As a way to.
Speaker Change: I understand the user better.
Speaker Change: Potentially create good matches between users. We think is a huge opportunity. So that's a second kind of component and then thirdly is application health or our quality.
Speaker Change: Trust and safety is another big component in there, we already actually doing a bunch of things using AI and we think we can improve.
George Arison: As any application like us, as a social media app or a dating app, there is behavior that is not allowed. It's against our community guidelines, or it is illegal. The more we can do to detect that type of behavior before it even happens or before anyone reports it and get it removed from the product and from the community, the better we are. Because that means we're creating a better experience for our users. Actually in using quite a bit of AI already, we have done, I think, a really good job in proactively finding bad behavior and getting it removed to the point where user reports on illegal activity in the app or activity that's against our community guidelines has dropped 50% over the last three years.
Speaker Change: Any application licenses, a social media app or data yet.
Speaker Change: There is a behavior that is not allowed right it's against our community guidelines or it is illegal the more we can do to detect that type of behavior before it even happens or before anyone reports it and get it removed from the from the products and from the community.
Speaker Change: Better right because that means we're creating a better experience for users.
Speaker Change: Using quite a bit of AI already.
Speaker Change: Have done I think a really good job in <unk>.
Speaker Change: Proactively finding bad behavior, and getting removed to the point, where user reports on illegal activity in the amp or activity that again Thats meeting guidelines has dropped 50% over the last three years and thats, because we want to be able to get it get ahead of it and get it off the top before it becomes a problem for anybody.
George Arison: That's because we're actually able to get ahead of it and get it off the app before it becomes a problem for anybody. That's the third bucket of where we think opportunity is significant within.
Speaker Change: And so that's the third bucket of where we think opportunities significant over there.
Rohit Kulkarni: Okay. Fantastic. I guess a question on weeklies versus monthlies. I guess just philosophically, how do you think about the lifetime value of a customer who's coming in for the first time and opting in for a weekly? How does the funnel progression, now that you probably have six to nine months worth of data, has been? Maybe talk through over a steady state, what proportion of your users you think are free versus weekly versus monthly going forward?
Speaker Change: Okay, Okay perfect.
Speaker Change: Yes.
Speaker Change: A question about a.
Speaker Change: Our weekly versus monthly.
Speaker Change: I guess.
Speaker Change: Just philosophically how do you how do you.
Speaker Change: Think about the lifetime value of a customer who's coming in and also the first time in bus opting in for weekly or how does the funnel progression, while what you probably have six to nine months worth of data.
Speaker Change: It has been and.
Speaker Change: Maybe talk through or a steady state what proportion of your users Ukraine for you versus weekly versus monthly.
Vanna Krantz: Thanks for the question, Rohit. Yes, we have been spending a lot of time now that we've got enough data to analyze our weekly and our monthly behavior. As you know, we have increased our paying users, we've increased payer penetration, and we've increased ARPU. So now it's time to look at LTV. We can do a nice analysis of LTV for the year. I think there's one thing that I'd like to share with everyone with respect to our user behavior, and that is that our app offers immediacy to our community. Therefore, the weekly proposition has really followed that intent and user use case. So we have not found the level of cannibalization that I might have expected with respect to weeklies and monthlies.
Speaker Change: Robert.
Speaker Change: Thanks for the question Rohit, Yes, we have been spending a lot of time now that we've got enough data to analyze our weekly and monthly behavior and as you know we have increased our paying users we've increased payer penetration and we've increased our pool and so now it's time to.
Speaker Change: That LTV, we can do a nice analysis of LTV for the year and I think there's one thing that I would like to share with everyone with respect to our user behavior and that is that.
Speaker Change: Our app.
Speaker Change: Offer immediacy to our community and therefore, the weekly proposition has really followed that intent.
Speaker Change: Case, and so we have not found a level of cannibalization that I might have expected with respect to weekly and monthly and in fact, a reactivation rate, which we've been absolutely are able to track now over the one year period is extremely healthy and so ecosystem has remained extremely.
Vanna Krantz: In fact, a reactivation rate, which we've been absolutely able to track now over the one-year period, is extremely healthy. Our ecosystem has remained extremely healthy and more available to more users. The LTVs are relatively close. We don't provide that data publicly, but what I can tell you is there is a cohort or subset of our users that enjoy the weekly product, and they tend to dip in and dip out. Yet we also have a different cohort of users that tend to stay in the product for longer. However, given the pricing, the LTVs are generally in the same zip code. We are pleased with our overall ecosystem. However, you also might notice at times, weekends versus weekdays and things like that it can become a little choppier now, but overall, very healthy. Does that answer your question?
Speaker Change: Healthy and more available to more users and so LTE theyre relatively close.
Speaker Change: We don't provide that data publicly but what I can tell you is there is a cohort or subset of ideas is that enjoy the weekly product.
Speaker Change: They tend to dip in and get out.
Speaker Change: We also have a different cohort of users that tend to stay in the product for longer however, given the pricing. The ltvs are generally in the same ZIP code. So we are pleased with our overall ecosystem. However.
Speaker Change: However, you also might notice at times weekend's worth it.
Speaker Change: Dave and things like that that it can become a little choppy or now, but overall very healthy.
Rohit Kulkarni: Yeah, absolutely. Thank you. Thank you for the color. Again, looking forward to the Investor Day. Hope to learn more about product and team. Good luck with that.
Speaker Change: Does that answer your question.
Speaker Change: Yeah, absolutely. Thank you. Thank you for the color and again looking forward to the Investor Day, you hope to learn more about product and team and good luck with that.
George Arison: Great. Thank you very much.
Vanna Krantz: Just one quick correction if there's no more questions. One, we actually did begin rolling out Unlimited in February, and it was fully rolled out in the quarter. I just wanted to make that correction.
Speaker Change: Thank you very much.
Speaker Change: So just one quick correction if theres no more.
Speaker Change: Questions.
Speaker Change: One we actually did begin rolling out amended in February and it was fully rolled out in the quarter and so I just wanted to make that correction preliminary weekly unlimited quickly.
George Arison: Unlimited weekly.
Vanna Krantz: Unlimited weekly.
George Arison: Yes.
Vanna Krantz: Thank you. I'll pass the line back to the operator now.
Operator: Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful evening.
Speaker Change: Thank you and I'll pass the line back to the operator now.
Speaker Change: Thank you. This does conclude today's program. Thank you for your participation you may disconnect at any time and have a wonderful evening.
