Q1 2025 Grindr Inc Earnings Call
Good afternoon, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone to the grinder first quarter 'twenty 25 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. If you would like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw that question again Crestar one thank.
Lou: Thank you I would now like to turn the conference over to tow Lou I D O J grinders head of Investor Relations <unk>. Please go ahead.
Speaker Change: Thank you moderator Hello, and welcome to the Grinder earnings call for the first quarter 2025.
Greenberg: Today's call will be led by Greenberg, CEO, George Aronson and CFO Democrat.
Speaker Change: 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 and this is available on the S. E C website, and grinders investor page at investors Duck Grinder Dot com.
Speaker Change: Before we begin I will remind everyone that during this call we may discuss our outlook future performance and future prospects you should not rely on forward looking statements as predictions of future events.
Speaker Change: These forward looking statements are subject to risks and uncertainties and our actual results could differ materially from the views expressed today.
Speaker Change: Some of the risks that could cause our actual results to differ from views expressed in our forward looking statements have been set forth in our earnings release and our periodic reports filed with the SEC, including our annual report on Form 10-K for the year ended December 31 2024.
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 these non-GAAP financial measures to their most closely comparable GAAP financial measure, are included in the earnings release issue today, which has been posted on the investor relations page of Grindr's website and in Grindr's filing with the SEC.
Let that alternate over to George.
Thanks, Tolo. Welcome everyone.
George Aronson: We're kicking off 2025 with exceptional Q1 results and strong momentum in product development.
George Aronson: Early data from several initiatives in testing is as confident to read out four-year outlook to 26 percent of greater revenue growth and at least 43 percent adjusted EBITDA market.
George Aronson: A Q-on-shall letter that went to Y 2025 is such a pivotal year for Grindr.
George Aronson: We're building one of the world's most advanced consumer type platforms in the beloved community of the integrated AI throughout the experience.
George Aronson: At last year's investor day, we outlined a bold roadmap centered on three pillars. First, deepening intent-based offerings in our core connections use case. Second, creating an AI architecture layer to power the app with a long term and third, building the digital table.
George Aronson: across all three were executing on or ahead of schedule. In the first connection pillar a single biggest current effort is right now which significantly expands our app's surface area for all users and it's performed strongly
George Aronson: We've now rolled it out to seventeen major cities including New York, Miami, London, Paris, and Rio.
George Aronson: In these markets, 20 to 25% of our users engage with right now weekly, and we began monetizing it in the select regions. The success is a key driver behind our updated guidance.
George Aronson: We expect to expand right now to nearly 50% of our weekly attributes over the next several weeks.
George Aronson: Where it is live, all users, including free users, can take it right now even with monetization.
George Aronson: On AI, we committed to making Glender an AI native leader among consumer apps.
George Aronson: Leveraging our distribution, user-based last data, we are creating previously unimaginable product experiences.
George Aronson: In January , we announced a suite of AI native products equally, now in testing with a core of unlimited users.
George Aronson: A list applies an architectural layer to users' track activity, over 130 billion tracks annually or 50 per daily user, providing smarter, best fit priority connections to each user, coupled with powerful, rich insights from conversations that have already taken place.
George Aronson: Sparing users the effort to manually curate favorites, or find other ways to track profile of their likes, they list automatically surfaces the connections that matter most based
Speaker Change: I encourage everyone to take a look at the demo link in our shareholder posted on our website. Even in this early version, it's an amazing product, giving us an early view into the incredible age of consumer products we'll experience with John AI.
Speaker Change: I'll let you also detail the steps we're taking to prioritize user control and transparency. This privacy remains more negotiable as we build AI products.
Speaker Change: For our third pillar, the gateway with such data launch would work, a men's hub subscription service designed by gay people or gay people.
Speaker Change: Partnering with a telehealth provider OpenMoop would work offers a compounded ED medication relevant to close to 30% of our users who have purchased ED medications in the last year and 60% who have considered using supplements or medicines for their sexual health.
Speaker Change: This capital-like low-execution risk initiative is a zero-to-one effort, a true seed-to-start-up within Grindr.
Speaker Change: As a startup, the woodwork team is focused on learning and it will be several quarters before we have meaningful updates to share.
Speaker Change: Today, thanks to our team's intense focus and discipline, the pace of part development Grindr is relentless.
Speaker Change: Over a first two years of public company we've laid a strong foundation and proven we can deliver.
Speaker Change: Our next core phase will come from the surgeon product in feature launches.
Speaker Change: To put this in perspective in 2024 launched eight new products and initiatives in 2025 for targeting over 40 across call use cases AI and the gatehood.
Speaker Change: As these roll out, we'll be focusing on optimizing our portfolio, balancing user experience with how we merchandise our growing set of unfolds.
Speaker Change: I'm thrilled by our team's ability to execute on its ambitious strategy in such a number way. It is inspiring to watch. We honor to be building these experiences for our fantastic community.
Now, over to Ben.
Ben: Thank you, George, and hello everyone. Grindr is off to a strong start this year. In the first quarter, total revenue grew 25% year over year to 94 million, and the adjusted EBIT emergent reached 43% to 41 million.
Ben: Direct revenue increased 24% year-over-year to 80 million driven by the continued demand for unlimited weekly, which launched late in Q1 of 2024.
Ben: and extra-weekly, which benefited this quarter from the international rollout of our recommendations feature, which shows more quality profiles.
Ben: This machine learning based enhancement shows profiles to our users based on relevancy in addition to geolocation which helps improve discovery.
Ben: Summarizing our key user metrics, average monthly active users increased 7% over the prior year to 14.6 million.
Ben: Average paying users in the quarter increased 16% over the prior year to 1.2 million, which brings paid penetration to 8% for the quarter.
Ben: And our average direct revenue per paying user increased 8% over the prior year to $22.86 this quarter.
Ben: Indirect revenue for Q1 grew 26% year-over-year to 14 million. In Q1 we introduced both native and rewarded ad formats, expanded our network of third-party ad partners, and further optimized our ad tech.
Ben: We are encouraged by the early results and expect these initiatives to continue to ramp in 2025.
Ben: Moving to expenses and profitability or operating expenses in Q1 of 2025, excluding 25 million in cost of revenue, was 44 million, up 21% year-over-year, primarily driven by compensation related expenses.
Ben: Adjusted EBITDA for the quarter was 41 million or 43% of revenue compared to 32 million or 42% of revenue a year ago.
Ben: And that income was 27 million for the first quarter, representing 29% of revenue compared to a net loss of 9 million in the same period last year. As we noted in our Q4 shareholder letter, on February 24th, we completed the redemption of all outstanding, unexercised, warrants.
Ben: As a result, beginning in Q2 2025, there will no longer be a re-evaluation of the warrant liability. Hence, we expect to report positive GACC EPS going forward.
Ben: Turning to cashflow in the balance sheet, in the first quarter Grindr generated free cashflow of just over 23 million and ended the quarter with approximately 256 million in cash and cash equivalence.
Ben: Our gross leverage was 1.9 times the last 12 months adjusted EBITDA.
Ben: During the first quarter, Grindr repurchased 141 million in common stock. At the end of Q1, we had 359 million remaining under the repurchase program.
Ben: Finally, as George mentioned, we are raising our guidance for the full year. We now expect revenue growth of 26% or greater and an adjusted EBITM margin of at least 43%.
Ben: This updated outlook reflects the strength of our business model and the expectations of our ability to drive enhanced monetization and operational efficiency.
We remain focused on executing against our product roadmap.
And with that operator, we'll now take questions.
Speaker Change: Thank you. We will now begin the question in answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.
Ben: And if you'd like to withdraw that question, press star one again.
Ben: Please limit yourself to one question and one follow-up. Your first question comes from John Blackledge with TD Cowan. Please go ahead.
Ben: Hey, thanks for the question. It's Logan on for John .
Maybe on the...
Speaker Change: on the higher 25 guidance. Could you tell us what changed?
Speaker Change: Since the initial forecast and maybe what the biggest drivers were of the the higher revenue growth and you've a dog growth targets and then longer term should we think any differently about your 2027 revenue and you've a target and then just have one fall as well.
[inaudible]
Sure. Thanks, Logan. Thanks for the question.
Speaker Change: As we said in March, in the first half of the year, we have a few ongoing tests of initiatives which are successful could have a positive impact on 2025 revenue and on EBITDA. And some of those tests have come in positive over the last few weeks.
Speaker Change: That coupled with right now early monetization are really impacting our guidance in a positive way. We move pretty fast at Grindr, so nine weeks is a pretty long time since March earnings.
Speaker Change: And as we said often we guide to what we have line of fight to and our race today is a reflection of our increased confidence.
Speaker Change: We also saw the FX tailwind benefit us in the bat ladder house of March.
Speaker Change: And this really dovetails into our EBITDA guide. And now that we're midway through Q2, we anticipate Q2 looking a lot like Q1 with respect to EBITDA. I just add a couple of thoughts on this.
Speaker Change: In the letter we talked significantly about the product work that we have underway, 40 new initiatives this year. And several of those are AI related. We're investing in becoming an AI first company and with that can come some elevated cost with respect to cloud.
Speaker Change: So in the past, we've also talked about managing discretionary spend in the second half based on how we see the year coming together. That's still the case.
George, you want to add a little bit about-
Speaker Change: Apple store policy. I'm happy to talk about that so obviously we know that a lot of users want to have a direct pay and assuming that the. Yeah.
Speaker Change: In cord rolling stays in place, that'll be a big benefit for users.
Speaker Change: and other products for us to be able to enable.
Speaker Change: Direct payment, we have to integrate with a provider and we also need to build some capabilities internally to handle that process both from the charge source, point of view, customer service, etc. But data is something that's on our roadmap and we will probably do to enable our users to be able to have a direct date with these.
Speaker Change: Great. Thanks for your question. Yes, definitely. Thank you. And then.
The woodwork announcement is super exciting.
Speaker Change: Could you maybe just, I'm curious as to how you may be planning to integrate it into the Grindr ecosystem over time and then how it might open up Grindr to other kind of healthcare-related offerings potentially in the future. Thanks.
Speaker Change: I just want to make sure on the Apple question, that is not in any way represented our guidance and so it's not, it would be completely added to that if that happened but since we have not done it, we can't really speak to what will happen with it since we tend to only guide to what we have a clear line of sight too.
Speaker Change: What's the woodwork? We're really excited about woodwork. I think it's a really great brand that the team has created. I think it really speaks to the Grindr user base. It was built by gay men for gay men. I think it's really good from that point of view. One I really emphasize that woodwork is in the earliest stages of a startup getting going. It's very much a serious seed, maybe even an angel stage company inside Grindr with a tiny team working on this.
Speaker Change: time and very limited amount of resources being elevated to it at the stage. That's done on purpose because I want the team to be very much operating in a startup learning mode like a very early stage set of boards where literally every day is critical for their survival and they want to work as hard as possible to achieve success. I think, you know, the correct is really critical to new things being started and that's what we're trying to have here.
Speaker Change: Obviously, we can definitely see opportunities to integrate with what Grindr does as well. You know, simple things like subscribe to woodwork and then you also get a discount on the Grindr subscription. Could be one one opportunity integration of payments between woodwork subscription and Grindr is another possibility. And there are other things that we can do. And then more broadly, woodwork is our healthcare and wellness brand. And it is not just in...
Speaker Change: I have this function medication brand. We will be adding other treatments to woodwork. And so we will be putting a broad spectrum of things. We know that a fairly large number of users have already used the Medication in the past. That's detailed in the show of letter. And another very large portion has part about or considered using it in the future. And so that's a strong kind of advantage to us. But again, woodwork is a very early stage business for us. Very much a kind of zero to one proposition.
Speaker Change: and I will not expect any updates on woodwork for the next several quarters, nor in any way it seemed in our guidance for this year.
Great. That's super helpful. Thank you.
Speaker Change: Your next question comes from the line of Andrew Murock with Raymond James. Please go ahead.
[inaudible]
Speaker Change: Hi, Raj Kornian here for Andrew Merrick at Raman James, congrats on the quarter. I just wanted to ask a couple of questions first. So one of your competitors this morning talked about increasing investment into initiatives and features addressed at the gay male community. How do you see Grindr's defensibility of its position, and to the extent that Grindr may have not served a specific need, how's your product line up addressing that? Thank you.
Thanks for your question. I've spoken.
Speaker Change: Many times in the past that you know we know people are going to use any different products and we're totally fine with them doing it and if someone wants to challenge Grindr you should challenge Grindr from the position of weakness rather than a position of strength. Any where Grindr is very strong.
Speaker Change: I've not really seen any one of our larger competitors do that and so I think you really need to understand what what gay men want and understand gay culture in an intimate way to be able to be able to do that and that's not been something that we've been seeing for my peers.
Speaker Change: What we do know is that our users very much want and game in the country we really want. Oh sorry, around the world we really want. Features in Grindr that address their specific needs and intentions.
Speaker Change: And that's why our entire product strategy for the Coral Grindr has built both around intent.
Right now is the first step.
Speaker Change: a major launch of ours that is very intent-focused, which is for people who want an immediate connection with somebody, whether it's...
Speaker Change: You know today or tomorrow or in the near term right now is a way to get that more easily than previously was possible.
Speaker Change: The response from users to that has been amazing. We know that 20 to 25% of our users are using right now on a weekly basis at least once a week.
shares.
Speaker Change: of location are about twice what they are in normal conversations which indicates the likelihood of meeting between people is much higher and that's what we're positive and so we're really happy with that launch and how that's gone but that's just one piece of our intentions based.
Speaker Change: roadmap, helping people do a better job identifying people who would be good partners for them for the long term from the relationship perspective is the other one that we need to launch as well and that's something we're working on. It's also on a roadmap from what we spoke about at investor day. Again, we know that among game and 35 and under, half of them want to be in a long-term and intimate relationship. That's a really big change from how game and far about things.
Speaker Change: Even 10 years ago, and so only 20 years ago, when I was younger, and we need to serve them really well in that regard, Grindr is by far the primary place where...
Speaker Change: Gay relationships today in America are formed between 3 to 4 gay relationships in New
Speaker Change: Formed on Grindr, like right now, it's already a huge percentage, but I think we can do a better job at that than we do and that's part of what we're trying to do. So I think our platform map is really robust from both the intention perspective and a bunch of other pieces. I'm happy to talk about those. And so I think our users will be quite happy with what they've seen coming down the path.
Speaker Change: Awesome. Really appreciate the color. For a follow-up if I may. So, I heard a bit from some of your peers that there's a little bit of macro weakness and certain segments of the audiences. How is that picture from your sea and how are you thinking about potential impacts from a broader economic slowdown? Thank you.
Speaker Change: Yeah, thanks for the question. You know, we're very fortunate that we've not seen any consumer like this and we can expect here as I've discussed.
Speaker Change: Obviously we are tracking that to make sure that it's not impactful but so far we've not seen anything and we feel really good about things that probably you know probably why we feel confident raising guidance on revenue and on EBITDA as much as we have.
Speaker Change: We've talked before that the gay men tend to have higher education levels than straight counterparts by about 2x.
Speaker Change: in the number of JDs, THGs, MBAs, MDs in the population. They also have much higher disposable income, both because they earn a lot more and then a lot of them don't have children which give them more disposable income. And so I think even if we were to have an economic kind of negative economic trends for our user base, they're going to be able to withstand that a lot better than an average kind of set of the population.
Speaker Change: I think that's really important to kind of remember. And then lastly, you know, we are not a place for politics and economics, we're a place where people come to escape that.
Speaker Change: people come to Grindr for fun, adventurous sex experiences, and that can be why in part they spend as much time as they do every day on Grindr and so in a situation of economic weakness, if there's a lot of commotion going on, you could very well envision a world where I think it was going to be more time on Grindr because they're dealing with all those things kind of off Grindr and they come here to escape that and be dealing with something else.
Speaker Change: It's so far we feel really good about what's happening with Grindr while whatever might be happening in the economy, and I do not really anticipate any impact from that to us this year.
Speaker Change: Love to hear and thanks again and congrats on the quarter.
Thank you.
Speaker Change: Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.
Speaker Change: Thanks so much for taking the question and hope is all as well with the team. As you look at the business right now, how you would characterize the scope for growth on users, engagement, and monetization. If you were to break the business down geographically between the international opportunity and where you're seeing in the U.S. as you look out of the next 12 to 18 months. Thanks so much.
Speaker Change: I'm sure happy to do that so from the perspective of kind of use of growth everywhere obviously it's a big big focus for us all the time.
Speaker Change: Grindr is by far the best-known gate brand in the world, and would have a lot of users in lots and lots of places, but there is a lot of opportunity to drive more people to use Grindr. The way we tend to think about that is product-led growth, right? So we create new products, and then those products are what...
brings people to one to use Grindricks.
Speaker Change: We, that's probably why we launched right now, where that is a significant kind of user growth expansion opportunity for people who previously might have been using Grindr more. For those kind of immediate connections, and over time I have said it is less because there are too many other things that are going on Grindr at the same time. This intention is based on a solution with right now, given my chance to be on Grindr just for right now and nothing else which we think.
Speaker Change: is great. Same thing with relationships that again, a user growth kind of opportunity that we think is significant because we do know from our user that yes, they know that Grindr has the critical method uses but we don't have features for relationships to consider oftentimes to go to a different product but then frequently come back to Grindr because we have the critical math and so we don't want them going through that. We want them to stay with us in our ecosystem looking for whatever relationship that might be looking for. So I think that...
Speaker Change: all kind of a lot of things that we're doing in product are very much driven with the idea to was creating more more user growth.
Speaker Change: And then with regards to international and domestic, we think there's plenty of opportunity to grow our domestic user base. Obviously we have an incredible brand in the U.S., 95% brand awareness on it, but not everybody who is in the community is using Grindr. And so we do believe that there's opportunities to grow now here. But obviously there's more opportunity internationally for one. We are less known abroad, right? We only have based on the country.
Speaker Change: We have tested. We're not tested everywhere. We're awfully about 60% awareness in a lot of those countries. Now, people who know us use this all the time. But people who don't know us, they can't use this because they don't know us. And so we need to do more work on that front.
Speaker Change: There's also opportunity to localize the app a lot better, starting with what we do in the app store and localizing that for given locations, as well as what we do with
Speaker Change: The product itself has been very little localization of the product ever in any way. That's not something that we are kind of necessarily working on in 2025. But those are the kinds of things that we are thinking about for the future. And yesterday we said that international growth is a long term opportunity for us and we still very much believe that and it's something that we're going to invest in over time because we do think it's something opportunity.
Speaker Change: Just to add, our conversion rates have been having a study cadence up in every region, so the product road map is definitely resonating with our users and you're seeing that in our paragraph.
Really appreciate it. Thanks.
[inaudible]
Speaker Change: Your next question comes from the line of Nick Jones with Citizen. Please go ahead.
Speaker Change: Hi, this is Luke on from Yank. Thanks for taking the question. Can you just expand a bit on the AI Native product suite powered by A-List and the early progress you're seeing there and maybe what you're most excited about. Thank you.
Speaker Change: Yeah, I mean, I'm super excited about A-list. I tell everybody that I've not yet seen another consumer product launch something like A-list where they're identifying a very clear user need and then using the most innovative.
Speaker Change: Gen.A.I. that's out there to create a previously unimaginable solution, like this was not possible before. I frankly use numerous products where I wish there was an A-list.
Speaker Change: Like, for example, I'd love an A-list in my personal Gmail. It would be really fantastic because...
Speaker Change: They know the the contacts kind of information in Gmail is nowhere near as helpful as it could be and should be and so I think there's a ton of opportunity with that with that so we are really really proud of what we built and how quickly we built it and how we probably use little before users really with strong encourage everybody to go and check it out at grindapproduct.com slash a list is about a one minute video but really gives you a kind of good deep dive into how a list works. [inaudible]
Speaker Change: There are a bunch of our AI-based products that are coming out this year, and we've already put the discover into a test. I think of the discover as...
Speaker Change: A new page inside Grindr where you can see people based on your interest and their interest where there's congruence from all over the world. So it breaks down the geographic barriers that usually exist inside dating products, including on Grindr, which...
Speaker Change: Our main grid is a very local base and that's very beneficial but we also do know that people want to find people everywhere and and this way it kind of gives them have you into people all over the world that might be appealing to them and there's many other things that are with AI kind of coming along as well.
We believe that these AI products
Speaker Change: are turning Grindr into an AI-cognitive product overall. So the same way that we basically invented location-based keep up product in 2009. We are now doing the same thing with AI and are very much at the forefront of what is possible. And I believe that's going to be really, really valuable to users. The value that we're creating for them through A-list, through Discover, through Insights, and other things that are on the come are going to be pretty significant.
Speaker Change: And whenever you create a large amount of value for users, there's always an opportunity to significantly monetize that. We have some points for how we'll do that, but not really just thinking about that yet. That'll be something we'll discuss probably, you know, a few quarter down the road.
Great talent. Thank you.
Thank you.
Speaker Change: In ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.