Q2 2025 Grindr Inc Earnings Call

Speaker #1: Please go ahead .

Speaker #2: Thank you . Moderator . Hello and welcome to The Grinder earnings call for the second quarter of 2025 . Today's call will be led by grinder CEO George Arison and CFO Vincent .

Speaker #2: They will make a few brief remarks and then we'll open it up for questions . Please note grinder released its shareholder letter this afternoon , and this is available on the SEC's website and Grinder's Investor page@investors.com .

Speaker #2: Before we begin , I will remind everyone that during this call , we may discuss our outlook for future performance and future prospects .

Speaker #2: You should not rely on forward looking statements as predictions of future events . These forward looking statements are subject to risks and uncertainties , and our actual results could differ materially from the views expressed today .

Speaker #2: Some of the risks that could cause our actual results to differ from those 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 31st , 2024 .

Speaker #2: 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 these non-GAAP financial measures to their most closely comparable GAAP financial measures , are included in the earnings release issued today , which has been posted on the Investor Relations page of Grindr's website and in Grindr Inc. filings with the SEC .

Speaker #2: With that , I'll turn it over to George .

Speaker #3: Thanks , Toto . And hi everyone . Finally delivered another strong quarter with results that keep us firmly on track for the year .

Speaker #3: I've said that 2025 is about accelerating execution toward our long term vision , including of transformative products the launch within the app , which expand how our users engage .

Speaker #3: This quarter is another proof point that we can deliver on our roadmap , while continuing to drive strong financial performance . For years , users have asked for maps within the app , but technical and privacy constraints made it hard to do well .

Speaker #3: This has changed , and we launched beta versions of mobile mapping in both right now and explore . Engaging with right now continues to be strong , and we've already begun to monetize the product faster than expected .

Speaker #3: We're excited to see adoption builds as we enable users to move fluidly between the Grid and Matthews . Explore remains one of our most valuable features , especially for power users and frequent travelers .

Speaker #3: With over 25% of our model using it monthly , we've now launched Explore Heat Maps dynamic city level views showing the most active areas across 21 markets , but with privacy in mind .

Speaker #3: He must reflect the historical not live activity to help users search smarter online and in real life . Longer term , maps unlock a powerful surface for the neighborhood for products around events , local activity , and businesses .

Speaker #3: If you've been following our shareholder letters , you've seen us articulated clear ambition to build one of the leading AI native consumer companies when it creates shareholder value by using AI to deliver high impact user experiences , differentiate value , and long term revenue growth .

Speaker #3: To that end , we're building a foundation called GUI or GUI , comprised of three layers a model layer using a combination of our custom models and leading third party foundation models , and architectural layer where we are applying Grindr Inc. behavioral , conversational and mental imagery data to evaluate , combine and enhance those models .

Speaker #3: Generating insights and capabilities tailored to specific context and needs . And an application layer that synthesizes those capabilities into differentiated user experiences . The architectural layer is core to our durable event .

Speaker #3: It allows us to run a variety of models to produce custom data sets and structured insights , training AI to understand gay life , cultural norms and male imagery , establish a robust privacy framework , and build a world class talent engine at the intersection of product engineering and AI .

Speaker #3: Our goal is to keep shipping features that wouldn't be possible without the stack , like A-list , while developing other products that match this level of ambition and value .

Speaker #3: For more detail , I'd encourage you to read the full shareholder letter . We've also posted a short deck on our website to walk you through our approach to GUI .

Speaker #3: I want to acknowledge Vienna for her amazing contributions as our CFO . Over the past three years , as Vienna has initiated a transition .

Speaker #3: She has graciously agreed to continue on in her role as we identify a successor . Vienna has been a key player in our team in setting us up to deliver the type of results you're seeing today , and he's been a great partner to myself and the Greiner team .

Speaker #3: We're all committed to business as usual as we move forward , and we will continue with strong and improving execution as a team .

Speaker #3: We're moving fast , executing well and making real progress on the future of Grindr Inc. while continuing to deliver strong results . Thank you all for your continued support .

Speaker #3: I'm excited about the momentum in the business and what H2 has to bring , and grateful to the team for their continued hard work .

Speaker #3: With that , I will turn it over to Vienna to update you on the financial results .

Speaker #4: Thank you George . I appreciate the kind words as well as the partnership from you and the entire team as we work towards a seamless transition .

Speaker #4: Now let's turn to the results . Grinder delivered another strong quarter in Q2 . Total revenue grew 27% year over year to $104 million , and the adjusted EBITDA margin was 43% , or 45 million .

Speaker #4: Right in line with our raised full year guidance we provided last quarter , which we are reaffirming . Direct revenue for the quarter was $87 million , up 24% year over year , with growth led by the continued strength of our subscription offerings as we further enhanced our recommendations feature and continue to benefit from merchandising and paywall optimizations , highlighting our key user metrics .

Speaker #4: Average monthly active users in Q2 were 14.9 million , representing 6% growth year over year . Average paying users in the quarter reached 1.2 million , up 16% year over year , and our average direct revenue per paying user increased 7% over the prior year to $23.65 this quarter .

Speaker #4: Indirect revenue was $17 million , up 39% year over year , driven by the ramping of our new third party advertising partners and early traction in international markets .

Speaker #4: As we continue to build out our third party advertising platform . Moving to expenses and profitability . Operating expense in Q2 , excluding cost of revenue , was $53 million , up 43% year over year , primarily driven by stock based compensation .

Speaker #4: Adjusted EBITDA for the quarter was $45 million , or 43% of revenue , compared to 37 million , or 45% of revenue a year ago .

Speaker #4: Net income was $17 million for the second quarter , representing 16% of revenue , compared to a net loss of $27 million in 22 million in the same period last year .

Speaker #4: In Q1 , we completed the redemption of all outstanding Unexercised warrants , which has eliminated the quarter to quarter valuation impact on GAAP net income .

Speaker #4: Accordingly , we delivered GAAP EPs in Q2 of $0.08 and expect to continue to generate positive EPs going forward . Turning to cash flow and the balance sheet .

Speaker #4: In the second quarter , grinder generated free cash flow of $37 million and ended the quarter with approximately $121 million in cash and cash equivalents .

Speaker #4: Our gross leverage was 1.7 times the last 12 months adjusted EBITDA year to date . Grinder has repurchased $325 million in common stock , and as of today , we have 175 million remaining under the share repurchase program .

Speaker #4: Based on our performance through the first half of the year , we are reaffirming our full year 2025 outlook of 26% or greater revenue growth and adjusted EBITDA margin of at least 43% .

Speaker #4: And with that , operator , we'll now take questions .

Speaker #1: Thank you . We will now begin the question and answer session . If you have dialed in and would like to ask a question , please press Star One on your telephone keypad to raise your hand and join the queue .

Speaker #1: If you would like to withdraw your question , simply press the star one again . If you are called upon to ask a question and listening via loudspeaker on your device , please pick up your handset and ensure that your phone is not on mute when asking your question .

Speaker #1: Again , please press Star one to join the queue and your first question comes from the line of John Blackledge of TD Cowan .

Speaker #1: Your line is now open .

Speaker #5: Hi there . It's Logan on for John . Thanks for the question . First first question maybe may use stepped up nicely in the quarter both sequentially and on a year over year basis .

Speaker #5: Could you just talk about the biggest drivers of top of funnel MOU growth in to Q and then looking forward ? Could you comment on kind of grinders penetration as you see it right now of the overall Tam and and the US and globally at this point .

Speaker #5: And then I just have one follow up question as well .

Speaker #3: Hi Logan . Good to talk to you and welcome everybody . On the question , I have three things I want to talk about .

Speaker #3: So bear with me as I as I go through that first on kind of how MWR is doing overall . Second on third party data and then thirdly , on long term opportunities , which I think we'll get to all the things you're asking about with regards to MWR right now .

Speaker #3: You're correct . MWR grew 6% quarter over year over year in Q2 . We are very happy with that and now is doing very well this summer as well .

Speaker #3: You know , we have a very , very healthy MWR situation with our users . We looked at users by country recently in terms of age , and we saw that we have a very strong presence with the younger cohorts , whether it's 18 to 20 2 or 20 3 to 29 cohorts , they're doing really , really well and growing in a very strong way .

Speaker #3: So the kinds of challenges that people talk about in this space with regards to Gen Z grinder does not have we're doing very well .

Speaker #3: I think that's partly because we are the place to go to . If you want to figure out what it's like to be gay and what your life is like .

Speaker #3: We either gayborhood on your phone for people who don't live in gayborhoods in large cities , and and that's what people kind of look forward to .

Speaker #3: So we're really happy with the number as of right now and kind of how it's how it's doing . And I , you know , generally don't expect that to change in the future .

Speaker #3: Number two topic on Maui is regarding third party data . You know , I know that a lot of you have to rely on these data sources for your analysis .

Speaker #3: And when you analysts and investors . But we also know that in Grindr's case , they regularly are incorrect in what they project .

Speaker #3: Frankly , probably more incorrect than correct . We've tried to work with them to understand their methodologies , to help them correct the methodology , but they don't want to release what the methodology is .

Speaker #3: And so it's impossible for us to help them along . We count more using unique devices . We think that's the most accurate way to do it .

Speaker #3: After a lot of work , having gone into it to figure out what is the best way , because our users do have some tendencies that are unique and unusual .

Speaker #3: People oftentimes create an account and then shut that account down and then create a new account . And you don't want that to be counted .

Speaker #3: As you know , two people in a given in a given quarter . So we go down to the level of to the level of device .

Speaker #3: And so while I totally appreciate the reliance on third party data , I think the reality is that , you know , our numbers speak for themselves .

Speaker #3: And I think Maui is growing very well . And then lastly , with regards to long term , we do think there's a lot of opportunity for what we can do .

Speaker #3: Grindr is historically has never been impacted by things that we do . It's always been kind of organic from the fact that people know us and and come to us , but we think there are a lot of things we can do to help that along .

Speaker #3: And I'll talk about two buckets , one in marketing and one in product . You know , on the marketing side , we believe that presenting ourselves better in different countries in a way that's more appropriate for that country would really help .

Speaker #3: And by that , I literally mean things like imagery that we show in the App Store , the language that we show in the App Store , and translations in the app itself would really help , especially in places like Asia and Latin America .

Speaker #3: And that's something we've not done and are working towards putting resources behind . Additionally , you know , we the same brand debt that Grindr faced in the United States three years ago , which I think was done a lot of work to correct .

Speaker #3: We need to do similar work in other parts of the world , Latin America in particular , and we're starting that in 2025 , and we'll continue into next year as well .

Speaker #3: And then on the product side , part of the concept behind intentions based products , which we've been talking about for for a long time now , is that there are people who might have a grinder but not use it as much , because grinder is very general in terms of what it's offering is , whereas they want a more specific intention , whether it's a right now intention , whether it's a relationship intention or whether it's something else like travel .

Speaker #3: And so as we build out these intention based products right now and like relationships , we believe that it's a way to bring users to be more engaged with the app .

Speaker #3: That mostly applies to users who are older , kind of 40 plus years in age , who have a Grindr account but might not be using it very much .

Speaker #3: On your second question , with regards to Tam , you know , we there's two ways to think about Tam . You can think of Tam as just number of people that Grindr could bring on board .

Speaker #3: And obviously we think there is a ton of growth opportunity there , less so in the developed world , although still a ton and more so in the developing countries like India and Philippines , etc.

Speaker #3: , where people are only now starting to come out and become comfortable with their sexualities . And so growth opportunity there with Tim is huge .

Speaker #3: But I also think another way to think of Tam is just dollars that we can go after , right ? The total amount of revenue we could amass .

Speaker #3: And our strategy is to both make Grindr the core product really great , but also to build these long term new new businesses like woodwork and the health vertical , where we can , you know , sell more things to our users and offer them more services .

Speaker #3: And so from that point of view , we think the Tam can expand dramatically , since obviously , healthcare alone for our users is a huge opportunity to expand Tam .

Speaker #3: And then there are other areas like travel that we're going to go after next that add more to the Tam . So we think Tam is is big and growing .

Speaker #3: So that's that's on your first two questions . Happy to answer the third .

Speaker #5: Great . Thanks George . Yeah on the mapping announcement . It's exciting . Could you could you just talk more about potential of mapping and and what it could mean for maybe other product initiatives and use cases outside of of like a right now or explorer looking forward .

Speaker #3: For for mapping . I just want to make sure I heard it right . Yeah . So we released in the shareholder . We talked about the fact that we released map features in the app .

Speaker #3: This is something that users have asked for for , for years . And you know , we show obviously Grindr is very location based .

Speaker #3: And so immediacy around you is very important . And people were always like , can you actually show us on a map how far somebody is ?

Speaker #3: And so we started to do that both in the explore feature as well as in right now . So in right now you can today in the places where it's out , look at users not just based on when they posted something , but also how close they are to you .

Speaker #3: And then in the explore function , we show you heatmaps in 21 cities where it's really busy . We use historical data , not live data , to protect users privacy .

Speaker #3: And that allows us to basically help users understand , hey , these are the areas where usually people are present . And if I want to search for people or if I want to figure out where to stay , etc.

Speaker #3: , I can use that data to to do that . So over the long term , we believe mapping can be really helpful in building out what we call local discovery , which is one of our long term gayborhood growth verticals .

Speaker #3: Things like identifying where to stay , where to eat , what kind of activities might be happening around you to go to , and that can be used by people locally , right ?

Speaker #3: Like if you're in San Francisco and you live in San Francisco , you still could use that or by people who want to travel to a given city for that .

Speaker #3: So those are the kinds of things that we envision long term mapping to help with , and we think it will be very valuable .

Speaker #3: It was a in the past , historically , it was a complicated technology to enable in the app because of the mobile nature of our app .

Speaker #3: And now technology is in a place where we think we can do it really well . And so we're psyched that it's out .

Speaker #5: Great . Thank you .

Speaker #1: Your next question comes from the line of Andrew Boon . Citizens , please go ahead .

Speaker #6: Hi . This is Brianna on for Andrew . Thanks so much for taking my questions . Can you just unpack what drove the acceleration in indirect revenue in the quarter ?

Speaker #6: And then on operating expenses it sets up this quarter . Can you walk us through the key drivers behind that increase ? Is this reflective of ongoing investment products marketing or headcount , and how should we think about investments going forward ?

Speaker #6: And then I have one more question to that .

Speaker #3: So I'll take the first question on on indirect revenue . And then I'll hand over to Vienna to speak about expenses . And then happy to do your next question as well .

Speaker #3: So I think if we talk about indirect revenue , it's worth it to talk about it conceptually , since from where we were to where we are when I joined Grindr in 2022 , that was an area that was significantly under invested in for a very long time and was not getting the attention that we believed it needed to kind of take advantage of the full opportunity .

Speaker #3: We have a very desirable user base , people that you know are very much trendsetters for the world in general , not just for for our community .

Speaker #3: And , you know , their income is higher there . Education is higher as well overall . And so a ton of opportunity with them go for , for for advertising .

Speaker #3: And we were not really taking any advantage of that at all . The growth that we've seen in advertising over the last three years has been primarily driven by third party advertising , and that that part of the business has done exceptionally well .

Speaker #3: I mean , I frankly don't think you could ask for anything more than what they've delivered . The growth numbers have been stunning .

Speaker #3: We've significantly increased the number of ads that we show users , because Grindr was showing very few ads to users before , while maintaining the CPM where it was in the past .

Speaker #3: And that's something that we didn't think was possible . We thought that CPM would inevitably go down . That was accomplished in part by adding more third party providers that Grindr was not working with before , who could serve ads in our platform .

Speaker #3: So it's been really successful . We've also added new formats for the types of ads that we show . For example , rewarded video , which also help us increase the CPM and do well there .

Speaker #3: And , you know , I would expect rewarded video in particular to be a big growth lever in 2025 as we in growth in 2026 , as we think about next year and where we will see some additional opportunity , we do not expect to be adding more ads per session that people see .

Speaker #3: We think we're now in a good place versus where we were before , although we do think that there is more opportunity for better quality ads and more fill rates of the ads internationally , since we're not fully at the same level as we are in the United States .

Speaker #3: And then lastly , I'd say the one area where , you know , I've had a lot of learnings and people told me when I joined that this would be a lot harder than I thought it would be .

Speaker #3: And that has to do with direct advertising . So these are ads that we partner with specific brands to , to do . We have a very good brand business .

Speaker #3: It's done , done very well as well and has grown significantly . But the categories of , you know , verticals that we've added to the brand , business or specific companies that have come on board is much lower than I think any of us had hoped would be the case today .

Speaker #3: That's not so much on Grindr anymore . Like , we've done a lot of the work that we needed to do in our product to to bring them , to have them come on board , whether it's , you know , getting them data that they need or the types of ad formats that they want .

Speaker #3: But what happened two years ago with Anheuser-Busch did set us back in a pretty significant way . People are , you know , I say people like brands are worried about advertising .

Speaker #3: And I think there we just need to continue to hammer the point that Grindr has a very desirable audience of trendsetting , you know , higher income , wealthier men who spend a lot of time on on the app .

Speaker #3: And it's a great way to reach them and , you know , do as good of a job in kind of pitching our story to them , as I think we've done in other places .

Speaker #3: And we're not going to give up . We think that there's still a ton of opportunity in the direct business to to grow .

Speaker #3: So I'm very happy with the indirect businesses performance this year and in the past , and we expect them to continue to perform really well .

Speaker #3: So with that , I'll pass it over to Vienna to talk about expenses .

Speaker #7: Hi there . So yes , you are correct . Our operating expenses are reflecting our investment in our products . As you know , we have a very exhaustive product roadmap and we're really excited about everything that we have that we're building for our users .

Speaker #7: So that is bringing along a little higher cost . We also have some accruals that we put that were put into place in Q2 .

Speaker #7: And additionally , I think last year what you might have seen is that we back ended some of our expenses as we are now more mature and we have more predictability in our overall financial profile by quarter .

Speaker #7: I would say that that you're just seeing a more flattish expense base in every quarter , and the margins are reflecting that at 43% , which is right on where we thought we would be .

Speaker #6: Got it . Thank you . And then just you mentioned in the letter that you're experimenting with pricing in existing peers and testing subscriptions as you guys add more value , understood that changes aren't expected to materially impact 2025 , but are there any early learnings that you guys can share on the test so far and how you're evaluating these changes ?

Speaker #3: Thank you . So I do want to reemphasize that none of the pricing changes are experiments that we might do will be material to this year .

Speaker #3: And so no one should kind of count on those for 2025 . And I think that's really important . You know , most of our focus for the rest of this year as a as a product team and an engineering team is around driving revenue growth next year .

Speaker #3: You know , I think it's really important to go into the year with a very clear plan of what you're going to be doing , and there's a lot of technical and product work to be done on on enabling that .

Speaker #3: And so one of those pieces has to do with experimenting with pricing . Grindr has not raised prices since 2018 for either its extra or unlimited offerings , which today are 1999 and 39.99 .

Speaker #3: If you just look at inflation from that period of time to from 2018 to today , that would push our extra price to something like 2550 and our unlimited price to $49 .

Speaker #3: In no way am I suggesting that that's the levels we're going to reach at right away or right now . So please don't assume that .

Speaker #3: But you know , that would imply that there is a lot of room just purely on inflation for us to to increase prices .

Speaker #3: You know , when you couple that with the fact that we've added a ton of new products over the last four years and added a lot of value to the premium tiers , and we think there is some level of opportunity there .

Speaker #3: And , you know , when I say we've added new products , like we've added a ton of free products or premium products to the experience , like right now , but then you get a lot more of right now if you are paying paying user , we've added albums which are available to everybody , but then you get more album capabilities if you are a paying customer .

Speaker #3: And then obviously in addition to that , there are specific products that are just for for premium users , such as A-list , which is only available to unlimited users and as of right now , to a portion of unlimited users .

Speaker #3: So we you know , when we released our three year plan , we talked about the fact that there's two ways we could go about reaching our long term goals .

Speaker #3: You know , either one of them could get us there , but obviously we wanted to do both . Number one was to get more users to pay for Grindr , and number two was to get people who do pay for rent or to pay more for all the value added services and products that they are getting from us .

Speaker #3: And so I think we've done very well with getting more users to pay , and we'll continue to do that , obviously . And now there's an opportunity for us to start looking at getting revenue from all the value that we created for users .

Speaker #3: So far , I don't have any learnings to talk about because we've not done that . This was mostly a kind of message to everybody that we will start doing that .

Speaker #3: And so as you see prices change , don't assume anything on that . This is experimentation and test learning process that we're going to go through over the next , you know , many months as we decide what the right place to be on price is .

Speaker #3: Operator .

Speaker #1: Okay . Once again , if you would like to ask a question , please press star one to join the queue . We'll pause for just a moment to compile the Q&A roster .

Speaker #1: And there are no further questions at this time . Ladies and gentlemen , that concludes today's call . Thank you everyone for joining .