Q1 2023 Grindr Inc Earnings Call
23 earnings conference call.
Operator: Declined our first quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be 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 press the star followed by the two.
Operator: 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 1 on your telephone keypad. If you would like to withdraw your question, press the star followed by the 2.
I would now like to turn the conference over to Patrick Lenihan VP of Communications. Please go ahead.
Operator: Thank you.
Patrick Lanihan: I would now like to turn the conference over to Patrick Lanihan, VP of Communications. Please go ahead. Thank you operator and good afternoon everyone.
Speaker Change: Thank you operator, and good afternoon, everyone. Today's call will be led by grinders, CEO, George Ericsson and CFO Vanna cramps.
Patrick Lanihan: 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.
I'll make a few brief remarks, and then we'll open it up for questions.
Speaker Change: I'll also note that we released our shareholder letter this afternoon and that is available on our website at investors dock grinder Dot com.
Patrick Lanihan: I'll also note that we released our shareholder letter this afternoon, and that is available on our website at investors.grinder.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. Their actual results could differ materially from the views expressed today.
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. These statements are subject to risks and uncertainties. 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.
Patrick Lanihan: 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.
Speaker Change: During today's call. We will also present, both GAAP and non-GAAP financial measures.
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.
Patrick Lanihan: 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 our Investor Relations page of our website and in our filing for the S&P.
Speaker Change: Which has been posted on our Investor relations page of our website.
Speaker Change: And in our filings with the SEC.
Speaker Change: With that I'll turn it over to George Harrison.
George Arison: With that, I'll turn it over to George Harris. Hello, everyone, and welcome to our first quarter earnings call. The year is off to a strong start financially, which Bener will discuss in a moment. I will begin by providing an update on the progress we've made against our four strategic priorities for 2020-21, which we shared on our March earnings call. These were improving user experience, driving modernization through conversions and new offerings, planning for future growth, and continuing to connect to our community. I'm very proud of the progress the team has made on each of these priorities.
George Harrison: Hello, everyone and welcome to our first quarter earnings call.
George Harrison: <unk> is off to a strong start financially, which then I will discuss in a moment I.
George Harrison: I will begin by providing an update on the progress we've made against our four strategic priorities for 2020.
George Harrison: Which was shipped on the March earnings call. These were improving the user experience.
George Harrison: In addition to conversions and new offerings.
George Harrison: Planning for future growth and continuing to commit towards me I'm.
George Harrison: I'm very proud of the progress the team has made on each of these pilots.
First we continue to do those things in February and we enhanced our very popular <unk> product by enabling video uploads and addition to close.
George Arison: First, we created the user experience. In February, we enhanced our very popular albums products by enabling video uploads in addition to photos. with the strong adoption of this addition to albums, over 1.1 million videos uploaded since we launched in beta in February. Additionally, over the last year, a small team has been working on an exciting new product we call Grindr Web, which we launched in alpha in Q1 and rolled out in beta globally last week for our extra and unlimited subscribers. While the feature set on Grindr Web is still limited, it helps us build a foundation for creating unique, web-specific features in 2024 and beyond.
George Harrison: With the strong adoption of this addition to <unk> with a $1 1 million videos uploaded has been launched in beta and temporary.
George Harrison: Additionally over the last year, a small team has been working on exciting new product, we call, Brian The web, which we launched in alpha in Q1 and rolled out in beta globally last week extra on unlimited subscribers.
George Harrison: Fisher said on Guaino web is still limited.
George Harrison: <unk> has built a foundation for creating unique specific teachers in 2024 and beyond.
George Harrison: Second driving monetization for conversion any offerings.
George Arison: Second, value monetization for conversion and new offerings. We're focused on identifying ways to most effectively monetize different value models measuring price points or levels of access to our compelling feature sets and testing weekly, monthly, and multi-month subscriptions. receive some of this activity show up in our results as we deliver positive monetization. As we said in March, these results may be uneven in the coming quarters as we test pricing to zero in on the optimal formula. While we continue to introduce new features and test new subscription tiers and paid offerings, we are mindful of the fact that our free product offers extensive functionality, and we are evaluating the right dividing line between free and paid functionality.
George Harrison: Focused on identifying ways to most effectively monetize different value models and price points or the levels of access to our components Hsn's and testing weekly monthly and onetime multi month subscriptions.
George Harrison: Seeing some of this activity show up in our results as we delivered positive monetization metrics as we said in March. These results may be uneven in the coming quarters as we test pricing in.
George Harrison: In on the optimal formula.
George Harrison: I would continue to introduce new features and test the subscriptions hasn't paid offerings.
George Harrison: Mindful of the fact that our fleet product offers extensive functionality and we're evaluating the right dividing line between clean and pay functionality.
George Harrison: Third planning for future growth.
George Arison: Third, planning for future growth. As we strengthen our foundation for long-term growth, we're paying close attention to the insights that we get from our users. A la carte offerings are a great example. We know that a la carte products are popular on other dating applications, and we've seen strong sustained success in Boost, our first a la carte offering. Given the success, we're building a set of additional offerings that we will release periodically over the next couple of years.
George Harrison: We strengthened our foundation for long term growth, we're paying close attention to the insights that we get from our users. Our current offerings for example, we know.
George Harrison: Know that our card products are popular on our dating applications and we've seen strong sustained success and boost our first of our card offerings.
George Harrison: Given the success, we're building instead of additional offerings that we will release periodically over the next couple of years.
George Harrison: Fourth serving LGBTQ team.
George Arison: worth serving the LGBTQ community. committed to serving our users and supporting our community.
George Harrison: Committed to serving our users and supporting our community.
George Harrison: First quarter, we launched <unk> HIV at home test kit ordering in the U S. In partnership with building healthy online communities Emory University and the U S Center for disease control and prevention.
George Arison: In the first quarter, we launched free HIV at-home test kit ordering in the U.S. in partnership with Building Healthy Online Communities, Emory University, and the U.S. Center for Disease Control and Prevention. 54,000 at-home HIV test kits were requested through this program in its first four weeks, and that number has continued to grow every day with the prominently placed order buttons coded into the Grindr app. One reason this project is so powerful is that in early testing, over 30% of users who requested at-home HIV test kits reported to have never had an HIV test before, which speaks to Grindr's ability to advance public health goals in communities that are very difficult to reach.
74000 at home HIV test kits were requested for this program in its first four weeks and that number has continued to grow every day with a permanently placed order buttons with coded into the funnel.
George Harrison: One reason is part of it is so powerful.
George Harrison: Lv testing over 30% of the users who requested at home HIV test kits with Cordis, we have never had an HIV test before.
Speaker Change: Which speaks to <unk> ability to advance public hospitals and communities that are very difficult to reach we will continue to serve as a resource for our clean and provide support where we can be most effective with that I'd like to turn the call over to our CFO.
George Arison: We will continue to serve as a resource for our community and provide support where we can be most effective.
Vanna Krantz: With that, I'd like to turn the call over to our CBO and our clients to walk through our first quarter financial results. Thank you, George. And hello, everyone. As George said, we had a strong first quarter growing revenue 28% year over year to $55.8 million while maintaining a very healthy adjusted EBITDA margin of 39%. Both revenue growth and EBITDA margin are slightly ahead of full year guidance of 25% or greater revenue growth with an adjusted EBITDA margin of 38% or greater. we reaffirm this earlier guidance. We are pleased to deliver results that demonstrate strong year-over-year growth, even as we test new features and price.
Speaker Change: To walk through our first quarter financial results.
Speaker Change: Thank you George and Hello, everyone.
Speaker Change: As George said, we had a strong first quarter growing revenue, 28% year over year to $55 $8 million, while maintaining a very healthy adjusted EBITDA margin of 39%.
Speaker Change: Both revenue growth and EBITDA margin are slightly ahead of full year guidance of 25% or greater revenue growth with an adjusted EBITDA margin of 38% or greater.
Speaker Change: We reaffirm this earlier guidance.
Speaker Change: We are pleased to deliver results that demonstrate strong year over year growth, even as we test new features and price points.
Speaker Change: In Q1, we averaged 866000 paying users up 20% from the first quarter of 2022.
Vanna Krantz: In Q1, we averaged 866,000 paying users, up 20% from the first quarter of 2022. Our average paying user penetration was 6.7% this quarter compared to 6.1% in the prior year period. Year over year, our average monthly active users grew to 12.8 million, a 9% increase. Average revenue per paying user was $18.53 this quarter compared with $16.77 in the first quarter of 2022. While ARPU is up both on a year-over-year and quarter-over-quarter basis, I'd like to remind you that this metric may fluctuate as we continue to test different subscription options across different price points and durations as we maximize opportunity in our overall ecosystem.
Speaker Change: Our average paying user penetration was six 7% this quarter compared to six 1% in the prior year period.
Speaker Change: Year over year, our average monthly active users grew to $12 8, million% to 9% increase.
Speaker Change: Average revenue per paying user was $18 53, this quarter compared with $16 77.
Speaker Change: In the first quarter of 2022.
Speaker Change: While our <unk> is up both on a year over year and quarter over quarter basis, I'd like to remind you that this metric may fluctuate as we continue to test different subscription options across different price points and durations as we maximize opportunity in our overall ecosystem.
Speaker Change: Turning to the more detailed results.
Vanna Krantz: turning to the more detailed results. Q1 2023 revenue of $55.8 million was up 28% year-over-year from $43.5 million in Q1 2022. Direct revenue increased $11.7 million to $48.1 million, up 32% year-over-year, led by growth in both subscription revenue and premium add-ons. Advertising or indirect revenue was up 8% on a year-over-year basis to $7.7 billion. Operating expenses increased by $12.5 million in Q1 2023 as Grindr hits its stride as a public company with the commensurate people costs and infrastructure expenses. The increase also reflects higher professional fees in connection with public company filings, audit and tax services, legal fees, and D&O insurance.
Speaker Change: Q1, 2023 revenue of $55 8 million was up 28% year over year from $43 5 million in Q1 of 2022.
Speaker Change: Direct revenue increased $11 7 million to $48 1 million up 32% year over year led by growth in both subscription revenue and premium add ons.
Speaker Change: Advertising or indirect revenue was up 8% on a year over year basis to $7 7 million.
Speaker Change: Operating expenses increased by $12 5 million in Q1, 2023 is kind of hits its stride as a public company with a commensurate people costs and infrastructure expenses.
Speaker Change: The increase also reflects higher professional fees in connection with public company filings audit and tax services legal fees and D&O insurance.
Speaker Change: We swung to a reported net loss of $32 9 million in Q1 from net income of $4 5 million in the first quarter of 2022.
Vanna Krantz: We swung to a reported net loss of $32.9 million in Q1, from net income of $4.5 million in the first quarter of 2022. As noted in our shareholder letter, there are three primary factors driving the change. Again, on fair value measurement of the outstanding warrants based on a higher stock price at quarter end. An income tax provision that includes timing differences, which will largely be offset by tax benefits in the remaining quarters of the year. and interest expense.
Speaker Change: As noted in our shareholder letter there are three primary factors driving the change.
A gain on fair value measurement of the outstanding warrants based on a higher stock price at quarter end.
Speaker Change: An income tax provision that includes timing differences, which will largely be offset by tax benefits in the remaining quarters of the year.
Speaker Change: And interest expense.
Speaker Change: Adjusted EBITDA for the first quarter of 2023 was $22 million or 39% of total revenue up from $20 3 million in the prior year period.
Vanna Krantz: Adjusted EBITDA for the first quarter of 2023 was $22 million, or 39% of total revenue, up from $20.3 million in the prior year period. The increase in adjusted EBITDA was driven by revenue growth partially offset by higher operating expenses on a normalized basis.
Speaker Change: The increase in adjusted EBITDA was driven by revenue growth, partially offset by higher operating expenses on a normalized basis.
Speaker Change: Turning to our balance sheet Greiner ended the first quarter was $33 8 million in cash and cash equivalents up from $27 8 million in the prior year period, and $8 7 million in the fourth quarter of 2022.
Vanna Krantz: Turning to our balance sheet, Griner ended the first quarter with $33.8 million in cash and cash equivalents, up from $27.8 million in the prior year period and $8.7 million in the fourth quarter of 2022.
Speaker Change: With that I'll pass it back to George.
George Arison: With that, I'll pass it back to George.
George: Thank you Anna we're excited about the progress we've made so quite a step and look forward to continuing to delight, our users server community and generate value for shareholders. At this time I'll ask the operator to open the line for questions.
George Arison: Thank you, Anna. We're excited about the progress we've made so far this year and look forward to continue to delight our users, serve our community, and generate value for our shareholders.
Operator: At this time, let the operator open a line book. Thank you.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session. Once again should you have a question. Please press the star followed by the one on your telephone keypad, you'll hit it right on prompt acknowledging your request questions will be taken in the order received should you wish to countermeasure requests.
Operator: Ladies and gentlemen, we will now begin the question-and-answer session. Once again, should you have a question, please press the star followed by the 1 on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the 2. If you are using a speakerphone, please leave the handset before pressing any button.
Speaker Change: Please press the Star followed later too if you're using a speaker phone. Please lift the handset before pressing any keys.
Speaker Change: Mr. Monahan there are no questions at this time please continue.
Patrick Lanihan: Mr. Lanihan, there are no questions at this time. Please continue.
Speaker Change: Hi, everyone. Thank you for joining today, we're glad to have a number of questions to come to us from retail investors by way of a city platform over Robin Hood.
Patrick Lanihan: Hi, everyone. Thank you for joining today.
Patrick Lanihan: We are glad to have a number of questions come to us from retail investors by way of the SAE platform over at Robinhood. First question comes from Mark R.
Speaker Change: First question comes from Mark are.
Speaker Change: I'm wondering if any of your board members to use the app.
George Arison: I'm wondering if any of your board members use the app. If so, it should be obvious that there are fake profiles, scammers, and others soliciting services. Can something be done about this?
Speaker Change: Yes, so it should be obvious that they're big profile scammers and other silicon and services can something be done about that.
Speaker Change: Thank you Patrick and thank you Mark for the question.
George Arison: Thank you, Patrick, and thank you, Mark, for the question. Well, to start with, the Grindr ownership and board prior to the company going public strongly prioritized ensuring that the Grindr management and board have a lot of representation from folks in the community that we serve. And so the answer is yes. There are many people on the board who use the app, and there are also many employees at Grindr in leadership roles that also use the app and have for many years. Since the transition to new ownership in 2020, Grindr has actively invested in custom service and content moderation.
Speaker Change: Well, let's start with the granular ownership and board prior to the company going public strongly prioritized ensuring that requires our management and board have a lot of representation from folks in the community.
Speaker Change: So the answer is yes, there are many people in the world who use the App and also many employees at grinder leadership roles that also gives me off and have for many years.
Speaker Change: Since the transition to new ownership in 2020 granite has absolutely invested in customer service and content moderation and I think we've made some really great strides in that regard on the platform.
George Arison: And I think we've made some really great strides in that regard on the platform. For example, since January 2021, overall, we've reduced user reports by more than 50%, even as the user base has grown. A few other concrete statistics on that front in the last two years. We've reduced spam reports by 86%, we've seen a 22% reduction in illegal activity reports from users, and a 39% reduction in bans for sexual solicitation. So I think we've made some really great strides in ensuring that the product is serving users well, and we're reducing spam and bad behavior as much as possible.
Speaker Change: For example, since January 2021, overall, we've reduced user reports and more than 50%, even if the user base has grown.
Speaker Change: A concrete statistics on that front in the last two years.
Speaker Change: Spam reports by 86%, we've seen a 22% reduction in illegal activity reports from users.
Speaker Change: And a 39% reduction in bansko sexual solicitation.
Speaker Change: I think we've made some really great strides in ensuring that the product is seven years as well and we are reducing spam and bad behavior as much as possible I do want to note that privacy is really important to many of our users and they rely on us to protect their identity and many of them have to be discrete. So we take that trust very seriously and we will continue to 72.
George Arison: I do want to note that privacy is really important to many of our users, and they rely on us to protect their identity, and many of them have to be discreet. So we take that trust very seriously and will continue to serve the community.
Speaker Change: Sure.
Speaker Change: Next question comes from Austin <unk>.
George Arison: Next question comes from Austin F. Will your app consider a verification? Thank you for that question, Austin, and it's obviously very connected to the first question we just answered.
Speaker Change: Will you consider a verification feature.
Speaker Change: Thank you for that question, often and it's obviously very connected to the first question was just answered we certainly thought about this and there are many divergent using community on this point.
George Arison: We've certainly thought about this, and there are many divergent views in our community on this point. Some folks very much want it, and others don't want it just as strongly for privacy reasons. So, as we've said before, trust is really paramount and we have to balance the needs from verification perspective with the needs from privacy perspective, and we'll continue to do that in the quarters to come.
Speaker Change: Some folks very much wanted and others don't want to just a strong liquid private citizens.
Speaker Change: So as we've said before trust is really Paramount and we have to balance the needs from verification in perspective with the need from privacy perspective, and we'll continue to do that in the quarters to come.
Speaker Change: Our next question comes from MSW.
George Arison: Our next question comes from Hanif W. Are you concerned about users moving to web-based competitors, and what is your plan to address that? It's a great question.
Speaker Change: Where are you concerned about users moving to web based competitors and.
Speaker Change: What is your plan to address that.
Speaker Change: It's a great question.
Speaker Change: It probably came before we announced the launch of the web last.
George Arison: I think it probably came before we announced the launch of the web last week. So, obviously, we know that users use many different applications and this is not a zero-sum game. People can be using different apps for different things. Our job at Grindr is to deliver the best user experience that we can and ensure that our users can access Grindr when and where they want. As you know, everyone probably knows we launched web beta just last week. This offers several key benefits, including bigger photos, easier chatting, and increased accessibility to users. And obviously, an opportunity to use the product on a desktop, which you couldn't do before.
Speaker Change: Last week. So obviously, we know that users use many different applications and this is not a zero sum game people can be using different apps for different things.
Speaker Change: Our job is to deliver the best user experience that we can.
Speaker Change: So that our users can access lender when and where they want.
Speaker Change: As everyone probably knows we launched web data just last week.
Speaker Change: Offers several key benefits, including but the photos you chatting and increase that facility to users and obviously an opportunity to use the product on a desktop which we couldn't do before.
Speaker Change: We're really excited about what this means for ground or in the future, including our ability to build certain types of functionality that you can only do on the web and you can't do now.
George Arison: We're really excited about what this means for Grindr in the future, including our ability to build certain types of functionality that you can only do on the web and can't do in a mobile app on iPhone or Android. And I think in that regard, we're really well covered and are excited about what to come.
Speaker Change: <unk> app on iPhone or Android.
Speaker Change: And so I think in that regard we are really well covered and are excited about what the future holds.
Speaker Change: Yes.
Next question comes from Oracle.
George Arison: Next question comes from Oral F. What's the plan to update the app's look and functionality? I very much appreciate the question. I and the whole team agree that making the user experience better is a huge priority for us. And we're building for a world where Grindr has a world-class app experience for our users. To this end, we obviously invested significant resources to ensure that we have a good experience.
Speaker Change: What's the plan to update the apps book and functionalities.
Speaker Change: Thanks, I appreciate the question I and the whole team and believe that making these experienced batteries a huge priority for us and.
Speaker Change: And we are building for a world, where Brian has a world class experience for our users.
Speaker Change: And to this end, we're obviously invested significant resources to ensure that we have a good experience as.
Speaker Change: As we discussed in March historically, Greiner has under invested in technology and the company has done a lot of work over the last couple of years to address the technical debt that was inherited from previous ownership.
George Arison: As we discussed in March, historically, Grindr has underinvested in technology, and the company has done a lot of work over the last couple of years to address the technical debt that was inherited from previous ownership. The results have been fairly positive. Availability is up. Flash time is down significantly. And in the last year, we've launched many features that we think are really beneficial to users and are what's brought, indeed, boost, albums, and most recently, our home screen redesign, which we'll discuss in a future call. And now, obviously, the launch of Grindr on the web in beta.
Speaker Change: The results have been fairly positive and mobility is up last time is down significantly.
Speaker Change: And then the last year. We've launched many features that we think are really beneficial to users and our quantum leap boost albums.
Speaker Change: And most recently, our homescreen Redesigns will discuss in a future call and now obviously the launch of grind or on the web and in beta.
Speaker Change: All of these actually are really great things for our users and there's a lot more to come.
George Arison: All of these, I think, are really great things for our users, and there's a lot more to come.
Speaker Change: As I've said before these are multi quarter investments.
George Arison: As I've said before, these are multi-quarter investments, since we operate a fairly lean but very efficient team. And I do want to say, some of these investments that we're making today will mean that you can't blame losing your chats on why you never get back to a guy in the future, since we're fixing that issue as well.
Speaker Change: We operated a fairly lean very efficient team.
Speaker Change: And I don't want to say some of these investments that we're making today will mean that you can't blame them, losing your chance on why Youll never get back to the guy in the future.
Speaker Change: We're fixing that issue as well.
Speaker Change: Thank you George.
Speaker Change: Next question comes from Paul.
George Arison: Thank you, George.
George Arison: Next question comes from Paul O. What is the percentage of paid subscribers versus Thanks for the question. So we disclose our payer penetration, and that's defined as payer users, which is both customers who buy our subscription products, as well as people who buy our a la carte products like Boots. and our average paying users for the quarter was 866. are monthly active users for the quarter with 12.8 million and that's a healthy 9% growth rate year-over-year. So that brings us to our 6.7% payer penetration that we disclosed in our shareholder letter. We're really focused on increasing our payer penetration, and that's why we're experimenting with our new subscription and a la carte offering.
Speaker Change: What is the percentage of paid subscribers versus users.
Speaker Change: Thanks for the question, so we disclose our payer penetration and that's defined as pairing users, which is both customers who buy our subscription products as well as people, who buy our Ala carte products like boost.
Speaker Change: And our average paying users for the quarter was 866000, our monthly active users for the quarter with $12 8 million and that's a healthy 9% growth rate year over year, So that brings us to our six 7% payer penetration that we disclosed in our shareholder letter.
Speaker Change: We're really focused on increasing our payer penetration and that's why we're experimenting with our new subscription and Ala carte offerings.
Speaker Change: We should see this story unfold over the coming quarters, as we dial up both our product lineup and optimize our pricing.
George Arison: So we should see this story unfold over the coming quarters as we dial up both our product lineup and optimize our.
Panna: Thank you Panna.
Speaker Change: Yeah.
Speaker Change: Next question is from Frank Kiana.
George Arison: Next question is from Frankiano C. What is the company's plan to increase profit? Thank you.
Speaker Change: What is the company's plan to increase profits.
Speaker Change: Thank you I love that question, we have a great business and we are generating double digit revenue growth with profit margins that are among the best in the industry.
George Arison: I love that question. We have a great business and we are generating double digit revenue growth with profit margins that are among the best in the industry. As you may have seen, we have laid out our plans to grow revenue for the future years by offering our users different features and products that meet their needs at their price. Also, we are carefully managing our costs, so we are focused on both levers of profitability. Finally, given that we are early in our monetization journey, you should see the benefits of operating leverage. take hold in the next quarters and years to come as our care penetration naturally increases.
Speaker Change: As you may have seen we have laid out our plans to grow revenue for the future years by offering our users different features and products that meet their needs at their price points. Also we are carefully managing our costs. So we are focused on both levers of profitability.
Speaker Change: Finally, given we are early in our monetization journey you should see the benefits of operating leverage take hold in the next quarters and years to come as our payer penetration naturally increases.
Speaker Change: Thank you.
Speaker Change: Our next and final question from the <unk> platform comes from Curtis Jay.
George Arison: Our next and final question from the SAIT platform comes from Curtis J. Will the price of premium services drop a bit?
Speaker Change: Well the price of premium services drop a bit.
Speaker Change: Thanks for the question Curtis.
George Arison: Thanks for the question, Kordesh. Today we have a relatively high entry point price for Extra and a very robust free service which we know our users very much appreciate. What we've heard from users is that they would like us to have an entry point price that is a little bit lower.
Speaker Change: Today, we have a relatively high entry point price.
Speaker Change: <unk> extra and the very robust free service, which we know argue there's very much appreciate it.
Speaker Change: We've heard from users that they would like us to have an entry price point.
Speaker Change: And to your point that is a little bit lower.
Speaker Change: We've tested a couple of ways to achieve this and look forward to telling you more about that towards the end of the year early next year. Once the testing is further along.
George Arison: We've tested a couple of ways to achieve this and look forward to telling you more about that towards the end of the year or early next year once the testing is further along. But it's something that we're actively working on and we believe we'll be able to meet users' need in that regard. We do believe that Extra and Unlimited offerings offer great value to subscribers and we're always focused on adding more functionality in each of these segments. Indeed, what we've heard from users is that for certain types of features, actually willing to pay more as long as we're able to provide them, which we are working on making sure that we can.
Speaker Change: But it's something that we're actively working on them and we believe we'll be able to meet this need in that regard we do believe that extra an unlimited offerings offer great value to subscribers and we are always focused on adding more functionality in each of the segments and did what we heard from users is that for certain types of features absolutely willing to pay more as long as we're able to pay.
Speaker Change: <unk>, which we are working on making sure that we can.
Speaker Change: As an example, we just recently launched web which is obviously a huge launch for us because it's a totally new innovation.
George Arison: As an example, we just recently launched Web, which is obviously a huge launch for us because it's a totally new innovation, and it's only available for external limited subscribers only. So we think that's another piece of value that we're providing for our paid customers.
Speaker Change: And it's only available external lender to subscribers only so we think that's another piece of value that we're providing for our customers.
Speaker Change: Okay.
Speaker Change: Great I think that we can.
Speaker Change: We're at the end of the question. So we can now and the call and thank you everybody for joining us.
Operator: Great, I think well with that we can, we're at the end of the questions so we can end the call and thank you everybody for tuning in. Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you all for participating.
Speaker Change: Thank you, ladies and gentlemen that does conclude your conference for today. Thank over participating you may all disconnect.