Grindr - Earnings Call - Q1 2025

Executive Summary

• Q1 revenue grew 25% YoY to $93.94M, with Adjusted EBITDA of $40.69M (43.3% margin) and net income of $27.02M (28.8% margin); diluted EPS was $0.09.
• Mix: Direct revenue $80M (+24% YoY) and Indirect (ads) $14M (+26% YoY), supported by Unlimited Weekly, XTRA Weekly merchandising, and new ad formats; MAUs 14.6M (+7% YoY), payers 1.2M (+16% YoY), ARPPU $22.86 (+8% YoY).
• Guidance raised: FY25 revenue growth ≥26% and Adjusted EBITDA margin ≥43% (from ≥24% and ≥41% on 3/5/25) — a clear positive revision vs..
• Versus S&P Global consensus*: revenue missed ($93.94M actual vs $95.94M est), while EPS was in line/slightly above ($0.09 reported vs ~$0.095 est actual; consensus $0.09) — CFO also guided Q2 EBITDA to look “a lot like Q1”. Values retrieved from S&P Global*.
• Catalysts: early monetization of “Right Now” (20–25% WAU engagement in launch cities) and ongoing AI-native “A-List” testing; redemption of all outstanding warrants removes non-cash P&L volatility going forward.

What Went Well and What Went Wrong

• What Went Well

  • Strong growth and profitability: revenue +25% YoY to $93.94M; Adj. EBITDA $40.69M (43.3% margin); NI $27.02M (28.8% margin).
  • Product and AI execution: “Right Now” expanded (15 new cities) with 20–25% weekly engagement and initial monetization in select markets; CEO: “We’re kicking off 2025 with exceptional Q1 results and strong momentum in product development”.
  • User monetization and ads: Direct revenue +24% YoY to $80M; Indirect (ads) +26% YoY to $14M, aided by native/rewarded formats and partner expansion.

• What Went Wrong

  • Revenue slightly below S&P Global consensus*: $93.94M actual vs $95.94M estimate*; EPS essentially in line/slightly above (reported $0.09 vs ~$0.09 est*) — minor top-line shortfall despite profitable quarter. Values retrieved from S&P Global*.
  • OpEx pressure: operating expenses (ex-COGS) rose 21% YoY to $44M (primarily compensation/SBC) as headcount increased 13% YoY, partially offset by scale (47% of revenue vs 48% prior year).
  • Cloud cost headwinds flagged: management noted AI investment will come with elevated cloud costs, implying careful second-half spend to preserve margins.

Transcript

Operator (participant)

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 Grindr First Quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Tolu Adeofe, Grindr's Head of Investor Relations. Tolu, please go ahead.

Tolu Adeofe (Director of Investor Relations)

Thank you, moderator. Hello and welcome to the Grindr earnings call for the first quarter 2025. Today's call will be led by Grindr's CEO, George Arison, and CFO, Vanna Krantz. They'll make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon, and this is available on the SEC's website and Grindr's investor page at investors.grindr.com. Before we begin, I will remind everyone that during this call, we may discuss our outlook, future performance, and future prospects. 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 can differ materially from the views expressed today.

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. 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 measure, are included in the earnings release we issued today, which has been posted on the investor relations page of Grindr's website and in Grindr's filings with the SEC. With that, I'll turn it over to George.

George Arison (CEO)

Thanks, Tolu. Welcome, everyone. We're kicking off 2025 with exceptional Q1 results and strong momentum in product development. Early data from several initiatives and testing give us confidence to raise our full-year outlook to 26% or greater revenue growth and at least 43% adjusted EBITDA margin. Our Q1 shareholder letter dives into why 2025 is such a pivotal year for Grindr. We're building one of the world's most advanced consumer tech platforms and a beloved community app that integrates AI throughout the experience. 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 for the long term. Third, building the digital neighborhood. Across all three, we're executing on or ahead of schedule.

In the first connections pillar, our single biggest current effort is RightNow, which significantly expands our app's surface area for all users and has performed strongly in testing. We've now rolled it out to 17 major cities, including New York, Miami, London, Paris, and Rio de Janeiro. In these markets, 20%-25% of our users engage with RightNow weekly, and we've begun monetizing it in select regions. The success is a key driver behind our updated guidance. We expect to expand RightNow to nearly 50% of our weekly active users over the next several weeks. Where it is live, all users, including free users, can take advantage of RightNow, even with monetization. On AI, we're committed to making Grindr an AI-native leader among consumer apps. Leveraging our distribution, user base, and vast data, we are creating previously unimagined product experiences. In January, we've announced a suite of AI-native products, including.

Now in testing with a quarter of Unlimited users. A-List applies our architecture layer to user chat activity. Over 130 billion chats annually, or 50 per daily user, providing smarter, best-fit priority connections to each user, coupled with thoughtful, rich insights from conversations that have already taken place. Sparing users the effort to manually curate favorites or find other ways to track profiles they like, A-List automatically surfaces the connections that matter most based on chat history. I encourage everyone to take a look at the demo linked in our shareholder letter 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 will experience with GenAI. Our letter also details the steps we're taking to prioritize user control and transparency, since privacy remains non-negotiable as we build AI products.

For our third pillar, the Gayborhood, with soft beta launched Woodwork, a men's health subscription service designed by gay people for gay people. Partnering with a telehealth provider, OpenLoop, Woodwork 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. This capital-light, low-execution risk initiative is a zero-to-one effort, a true seed-stage startup within Grindr. As a startup, the Woodwork team is focused on learning, and it will be several quarters before we have meaningful updates to share. Today, thanks to our team's intense focus and discipline, the pace of product development at Grindr is relentless. Over our first two years as a public company, we've laid a strong foundation and proven we can deliver.

Our next growth phase will come from a surge in product and feature launches. To put this in perspective, in 2024, we launched eight new products and initiatives. In 2025, we're targeting over 40 across core use cases, AI, and the Gayborhood. As these roll out, we'll be focused on optimizing our portfolio, balancing user experience with how we merchandise our growing set of offerings. I'm thrilled by our team's ability to execute on this ambitious strategy in such a nimble way. It is inspiring to watch. We're honored to be building these experiences for our fantastic community. Now, over to Vanna.

Vanna Krantz (Advisor)

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 EBITDA margin reached 43% to $41 million. 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, and Extra weekly, which benefited this quarter from the international rollout of our recommendations feature, which shows more quality profiles. This machine learning-based enhancement shows profiles to our users based on relevancy, in addition to geolocation, which helps improve discovery. Summarizing our key user metrics, average monthly active users increased 7% over the prior year to 14.6 million. 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.

Our average direct revenue per paying user increased 8% over the prior year to $22.86 this quarter. 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. We are encouraged by the early results and expect these initiatives to continue to ramp in 2025. Moving to expenses and profitability, our 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. Adjusted EBITDA for the quarter was $41 million, or 43% of revenue, compared to $32 million, or 42% of revenue a year ago. Net 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. As a result, beginning in Q2 2025, there will no longer be a reevaluation of the warrant liability. Hence, we expect to report positive GAAP EPS going forward. Turning to cash flow and the balance sheet, in the first quarter, Grindr generated free cash flow of just over $23 million and ended the quarter with approximately $256 million in cash and cash equivalents. Our gross leverage was 1.9 times the last 12 months' adjusted EBITDA. 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. 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 EBITDA margin of at least 43%. 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. With that, operator, we'll now take questions.

Operator (participant)

Thank you. We will now begin the question-and-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. If you'd like to withdraw that question, press star one again. Please limit yourself to one question and one follow-up. Your first question comes from John Blackledge with TD Cowen. Please go ahead.

John Blackledge (Senior Equity Research Analyst)

Hi, thanks for the question. It's Logan Ahn for John. Maybe on the higher 2025 guidance, could you tell us what changed since the initial forecast and maybe what the biggest drivers were of the higher revenue growth and EBITDA growth targets? Longer term, should we think any differently about your 2027 revenue and EBITDA targets? I just have one follow-up as well.

Vanna Krantz (Advisor)

Sure. Thanks, Logan. Thanks for the question. As we said in March, in the first half of the year, we have a few ongoing tests of initiatives which, if successful, could have a positive impact on 2025 revenue and on EBITDA. Some of those tests have come in positive over the last few weeks. That, coupled with RightNow 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. As we said, often we guide to what we have line of sight to, and our raise today is a reflection of our increased confidence. We also saw the FX tailwind benefit us in the latter half of March. This really dovetails into our EBITDA guide.

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. In the letter, we talked significantly about the product work that we have underway, 40 new initiatives this year. Several of those are AI-related. We're investing in becoming an AI-first company. With that can come some elevated costs with respect to cloud. 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, do you want to add a little bit about the Apple Store policy?

George Arison (CEO)

Yeah, I'm happy to talk about that. Obviously, we know that a lot of users want to have direct pay. Assuming that the court ruling stays in place, that'll be a big benefit for users of Grindr and of our products. For us to be able to enable direct payment, we have to integrate with a provider. We also need to build some capabilities internally to handle that process, both from ChargeLog's point of view, customer service, et cetera. It is something that's on our roadmap and we will probably do to enable our users to be able to have direct pay capabilities.

John Blackledge (Senior Equity Research Analyst)

Great. Thanks.

Vanna Krantz (Advisor)

Does that answer your question?

John Blackledge (Senior Equity Research Analyst)

Yes, definitely. Thank you. The Woodwork announcement is super exciting. Could you maybe just, I'm just curious as to how you maybe plan 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.

George Arison (CEO)

Totally. I just want to make sure on the Apple question, that is not in any way represented in our guidance. It would be completely additive to that if that happened. Since we have not done it, we cannot really speak to what will happen with it since we tend to only guide to what we have a very clear line of sight to. With regards to Woodwork, yeah, we are really excited about Woodwork. I think it is 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 is really good from that point of view. I want to really emphasize that Woodwork is in the earliest stages of a startup getting going.

It's very much a series seed, maybe even an angel stage company inside Grindr with a tiny team working on this full time and very limited amount of resources being allocated to it at this 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 startup would, where literally every day is critical for their survival and they want to work as hard as possible to achieve success. I think grit is really critical to new things being started, and that's what we're trying to have here. Obviously, we can definitely see opportunities to integrate with what Grindr does as well. Simple things like subscribe to Woodwork and then you also get a discount on the Grindr subscription could be one opportunity. Integration of payments between Woodwork subscription and Grindr is another possibility.

There are other things like that that we can do. More broadly, Woodwork is our healthcare and wellness brand. It is not just an erectile dysfunction medication brand. We will be adding other treatments to Woodwork. We will be printing a broad spectrum of things. We know that a fairly large number of users have already used ED medication in the past. That is detailed in the shareholder letter. Another very large portion has thought about or considered using it in the future. That is a strong kind of advantage to us. Woodwork is a very early stage business for us, very much a kind of zero-to-one proposition. I would not expect any updates on Woodwork for the next several quarters, nor is it in any way assumed in our guidance for this year.

John Blackledge (Senior Equity Research Analyst)

Great. That's super helpful. Thank you.

Operator (participant)

Your next question comes from the line of Andrew Marok with Raymond James. Please go ahead.

Andrew Marok (Director of Equity Research)

Hi, Raj calling in here for Andrew Marok at Raymond James. Congrats on the quarter. 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 lineup addressing that? Thank you.

George Arison (CEO)

Thanks for the question. I've spoken many times in the past that we know people are going to use many different products, and we're totally fine with them doing it. If someone wants to challenge Grindr, you should challenge Grindr from the position of weakness rather than a position of strength, meaning where Grindr is very strong. I've not really seen any one of our larger competitors do that. I think you really need to understand what gay men want and understand gay culture in an intimate way to be able to do that. That's not been something that we've been seeing from our peers. What we do know is that our users very much want, and gay men in the country really want, or sorry, around the world really want, features in Grindr that address their specific needs and intentions.

Our entire product strategy for the core of Grindr has been built around intent. Right Now is the first major launch of ours that is very intent-focused, which is for people who want an immediate connection with somebody, whether it is today or tomorrow or in the very near term. Right Now is a way to get that more easily than previously was possible. The response from users to that has been amazing. We know that 20%-25% of our users are using Right Now on a weekly basis, at least once a week. Shares of location are about twice what they are in normal conversations, which indicates the likelihood of meeting between people is much higher. That is really positive. We are really happy with that launch and how that has gone. That is just one piece of our intentions-based 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. That is something we're working on. It is also on a roadmap from what we spoke about at Investor Day. Again, we know that among gay men 35 and under, half of them want to be in a long-term monogamous relationship. That is a really big change from how gay men thought about things even 10 years ago and certainly 20 years ago when I was younger. We need to serve them really well in that regard. Grindr is by far the primary place where gay relationships today in the U.S. are formed. About between three to four gay relationships in the U.S. are formed on Grindr right now. It is already a huge percentage.

I think we can do a better job at that than we do. That is part of what we're trying to do. I think our product roadmap is really robust from both the intentions perspective and a bunch of other pieces. Happy to talk about those. I think our users will be quite happy with what they're seeing coming down the pipe.

Andrew Marok (Director of Equity Research)

Awesome. Really appreciate the color. For a follow-up, if I may, I heard a bit from some of your peers that there's a little bit of macro weakness in certain segments of the audiences. How's that picture from your seat? And how are you thinking about potential impacts from a broader economic slowdown? Thank you.

George Arison (CEO)

Yeah, thanks for the question. We are very fortunate that we've not seen any consumer ecosystem weakness that peers have discussed. Obviously, we are tracking that to make sure that it's not impactful. So far, we've not seen anything. We feel really good about things. That's probably partly why we feel confident raising guidance on revenue and on EBITDA as much as we have. We've talked before that gay men tend to have higher education levels than their straight counterparts by about 2x in the number of JDs, PhDs, 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 gives them more disposable income.

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. I think that's really important to kind of remember. Lastly, we are not a place for politics and economics. We're a place where people come to escape that. People come to Grindr for fun, adventurous, sexy experiences. That's actually why in part they spend as much time as they do every day on Grindr.

In a situation of economic weakness, if there is a lot of commotion going on, you could very well envision a world where people are spending more time on Grindr because they are dealing with all those things kind of off Grindr, and they come here to escape that and be dealing with something else. So far, we feel really good about what is happening with Grindr while whatever might be happening in the economy. I do not really anticipate any impact from that to us this year.

Andrew Marok (Director of Equity Research)

Love to hear it. Thanks again and congrats on the quarter.

George Arison (CEO)

Thank you.

Operator (participant)

Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Eric Sheridan (Managing Director)

Thanks so much for taking the question. I hope all is well with the team. As you look at the business right now, how would you characterize the scope for growth on users, engagement, and monetization if you were to break the business down geographically between the international opportunity and what you're seeing in the U.S. as you look out over the next 12 to 18 months? Thanks so much.

George Arison (CEO)

Sure. Happy to do that. From the perspective of kind of user growth everywhere, obviously, it's a big focus for us all the time. Grindr is by far the best-known gay brand in the world. We have a lot of users in 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. We create new products, and then those products are what brings people to want to use Grindr. That's partly why we launched RightNow, 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.

Over time, might have started to use it less because there are too many other things that are going on at Grindr at the same time. This intentions-based kind of solution with RightNow gives them a chance to be on Grindr just for RightNow and nothing else, which we think is great. Same thing with relationships. That's again a user growth kind of opportunity that we think is significant because we do know from our users that, yes, they know that Grindr has the critical mass of users, but we do not have features for relationships. They consider oftentimes to go to a different product, but then frequently come back to Grindr because we have the critical mass. We do not want them going through that. We want them to actually stay with us in our ecosystem looking for whatever relationship they might be looking for.

I think that's all kind of a lot of things that we're doing in product are very much driven with the idea towards creating more user growth. 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 unaided, but not everybody who is in the community is using Grindr. We do believe that there is opportunity to grow now here. Obviously, there's a lot more opportunity internationally. For one, we are less known abroad. We only have, based on the countries we have tested, we've not tested everywhere, roughly about 60% awareness in a lot of those countries. People who know us use us all the time. People who don't know us, they can't use us because they don't know us.

We need to do more work on that front. There is also opportunity to localize the app a lot better, starting with kind of what we do in the App Store and localizing that for given locations, as well as what we do with the product itself. There has been very little localization of the product ever in any way. That is 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. At Investor Day, we said that international growth is a long-term opportunity for us, and we still very much believe that. It is something that we are going to invest in over time because we do think it is a big opportunity.

Vanna Krantz (Advisor)

Just to add, our conversion rates have been having a steady cadence up in every region. The product roadmap is definitely resonating with our users, and you're seeing that in our payer growth.

Eric Sheridan (Managing Director)

Really appreciate it. Thanks.

Operator (participant)

Your next question comes from the line of Nick Jones with Citizens JMP. Please go ahead.

Nicholas Jones (Managing Director of Internet Equity Research)

Hi, this is Luke on for Nick. 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.

George Arison (CEO)

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 GenAI that's out there to create a previously unimaginable solution. This was not possible before. I frankly use numerous products where I wish there was an A-List. For example, I'd love an A-List in my personal Gmail. It would be really fantastic because the contacts kind of information in Gmail is nowhere near as helpful as it could be and should be. I think there's a ton of opportunity with that. We are really, really proud of what we've built and how quickly we built it and how we believe useful it will be for users. Really, we strongly encourage everybody to go and check it out at grindrproduct.com/alist.

It's about a one-minute video, but really gives you a kind of good deep dive into how A-List works. There are a bunch of other AI-based products that are coming out this year. We've already put Discover into test. Think of Discover as a new page inside Grindr where you can see people based on your interests and their interests, where there's congruence from all over the world. It breaks down the geographic barriers that usually exist inside dating products, including on Grindr, which our main grid is very local-based, and that's very beneficial. We also do know that people want to find people everywhere. This way, it kind of gives them a view into people all over the world that might be appealing to them. There are many other things that are with AI kind of coming along as well.

We believe that these AI products are turning Grindr into an AI-native product overall. The same way that we basically invented location-based products in 2009, we are now doing the same thing with AI and are very much at the forefront of what is possible. 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. Whenever you create a large amount of value for users, there's always an opportunity to significantly monetize that. We have some plans for how we will do that, but not ready to speak about that yet. That'll be something we'll discuss probably a few quarters down the road.

Nicholas Jones (Managing Director of Internet Equity Research)

Great, Palin. Thank you.

Operator (participant)

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.