Grindr - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered solid top-line and cash flow: revenue grew 27% YoY to $104.220M, net income was $16.638M (16.0% margin), and Adjusted EBITDA was $45.207M (43.4% margin).
• Versus consensus: revenue was roughly in line ($104.220M vs $104.775M*), but EPS missed ($0.0828 actual vs $0.1033*); Adjusted EBITDA exceeded internal margin guardrails yet SPGI’s EBITDA actual is not directly comparable to company Adjusted EBITDA*.
• Guidance maintained: management reaffirmed FY25 outlook of ≥26% revenue growth and ≥43% Adjusted EBITDA margin, following a raise last quarter from the initial 24%/41% framework.
• Key catalysts: product momentum (mapping in Right Now and Explore heatmaps), strong indirect ads ramp, and gAI/A-List rollout supporting premium monetization into 2026.

Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

• Direct revenue grew 24% YoY to $87M and indirect revenue rose 39% YoY to $17M, supported by subscription enhancements, merchandising/paywall optimization, and new ad partners/formats.
• User KPIs improved: Average MAUs reached 14.9M (+6% YoY), average paying users hit 1.2M (+16% YoY), and ARPPU expanded to $23.65 (+7% YoY).
• Management emphasized AI-native product progress: “We are delivering on our performance objectives while continuing to execute at a high level on our product innovation and AI roadmaps” — George Arison (CEO). Also highlighted A-List as the first AI-native product at scale to redefine user connection.

What Went Wrong

• EPS missed consensus (actual $0.0828 vs $0.1033*), despite revenue being broadly in line*.
• Operating expenses (ex-COGS) rose 43% YoY to $53M, driven primarily by stock-based compensation, pressuring EPS despite strong EBITDA margins.
• Direct brand advertising remains slower than hoped due to lingering industry caution post-Anheuser Busch; international ad fill rates still have room to improve.

Values retrieved from S&P Global.*

Transcript

Speaker 5

Good afternoon. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Grindr Inc. second 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 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 one again. Thank you. I would now like to turn the conference over to Tolu Adeofe, Grindr Inc. Head of Investor Relations. Please go ahead.

Speaker 0

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

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. This is posted on the investor relations page of Grindr's website and in Grindr's filings with the SEC. With that, I'll turn it over to George.

Speaker 3

Thanks, Tolu, and hi everyone. Grindr delivered another strong quarter with results that keep us firmly on track for the year. I've said that 2025 is about accelerating execution towards our long-term vision, including the launch of transformative products within the app, which expand how our users engage. 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 Grindr app, but technical and privacy constraints made it hard to do well. 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. We're excited to see adoption build as we enable users to move fluidly between the grid and new map views.

Explore remains one of our most valuable features, especially for power users and frequent travelers, with over 25% of our MAU using it monthly. We've now launched Explore Heatmap, dynamic city-level views showing the most active areas across 21 markets. With privacy in mind, heatmaps reflect 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. If you've been following our shareholder letters, you've seen us articulate a clear ambition to build one of the leading AI-native consumer companies that create durable shareholder value by using GenAI to deliver high-impact user experiences, differentiated value, and long-term revenue growth.

To that end, we're building a full-stack foundation called GAI, or GAI, comprised of three layers: a model layer using a combination of our custom models and leading third-party foundation models, an architecture layer where we are applying Grindr's behavioral, conversational, and male imagery data to evaluate, combine, and enhance those models, generating insights and capabilities tailored to case-specific context and needs, and an application layer that synthesizes those capabilities into differentiated user experiences. The architecture layer is core to our durable advantage. It allows us to run a variety of models to produce custom datasets and structured insights, train GAI 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.

Our goal is to keep shipping features that wouldn't be possible without the stack, like A-List, while developing other products that match the level of ambition and value. For more detail, I'd encourage you to read the full shareholder letter. We have also posted a short deck on our website to walk you through our approach to GAI. I want to acknowledge Vanna for her amazing contributions as our CFO over the past three years. We announced last week that Vanna has initiated a transition. She's graciously going to continue on in her role as we identify a successor. Vanna has been a key player on our team in setting us up to deliver the type of results you're seeing today, and she's been a great partner to myself and the Grindr team.

We're all committed to business as usual as we move forward, and we will continue with strong and improving execution. As a team, we're moving fast, executing well, and making real progress in the future of Grindr while continuing to deliver strong results. Thank you all for your continued support. I'm excited about the momentum in the business and what HQ has to bring, and grateful to the team for their continued hard work. With that, I will turn it over to Vanna to update you on the financial results.

Speaker 2

Thank you, George. I appreciate the kind words as well as the partnership from you and the entire Grindr team as we work towards a seamless transition. Now let's turn to the results. Grindr 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, 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, 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.

Our average direct revenue per paying user increased 7% over the prior year to $23.65 this quarter. 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 as we continue to build out our third-party advertising platform. Moving to expenses and profitability, operating expense in Q2, excluding $27 million in cost of revenue, was $53 million, up 43% year over year, primarily driven by stock-based compensation. Adjusted EBITDA for the quarter was $45 million, or 43% of revenue, compared to $37 million, or 45% of revenue a year ago. Net income was $17 million for the second quarter, representing 16% of revenue compared to a net loss of $22 million in the same period last year.

In Q1, we completed the redemption of all outstanding unexercised warrants, which has eliminated the quarter-to-quarter valuation impact on GAAP net income. 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, in the second quarter, Grindr generated free cash flow of $37 million and ended the quarter with approximately $121 million in cash and cash equivalents. Our gross leverage was 1.7 times the last 12 months' adjusted EBITDA. Year to date, Grindr has repurchased $325 million in common stock, and as of today, we have $175 million remaining under the share repurchase program. 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%. With that, operator, we'll now take questions.

Speaker 5

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. If you would like to withdraw your question, simply press the star one again. If you are called upon to ask your 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. Please press star one to join the queue. Your first question comes from the line of John Blackledge of TD Cowen. Your line is now open.

Hi there. It's Logan on for John. Thanks for the question. First question may be, MAUs stepped up nicely in the quarter, both sequentially and on a year-over-year basis. Could you just talk about the biggest drivers of top-of-funnel MAU growth in 2Q? Could you comment on kind of Grindr's penetration as you see it right now of the overall TAM in the U.S. and globally at this point? I just have one follow-up question as well.

Speaker 3

Hi, Logan. Good to talk to you and welcome everybody. On the Mile question, I have three things I want to talk about, so bear with me as I go through that. First on kind of how Mile is doing overall, second on third-party data, and then thirdly on long-term Mile opportunities, which I think we'll get to all the things you're asking about. With regards to Mile right now, you're correct. Mile grew 6% quarter year over year in Q2. We are very happy with that, and Mile is doing very well this summer as well. We have a very, very healthy Mile 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 22 or 23 to 29 cohorts.

They're doing really, really well and growing in a very strong way. The kinds of challenges that people talk about in this space with regards to Gen Z, Grindr does not have. We're doing very well. I think that's probably because we are the place to go to if you want to figure out what is effective a day and what your life is like. We are the neighborhood on your phone for people who don't live in neighborhoods in large cities, and that's what people kind of look forward to. We're really happy with the Mile number as of right now and kind of how it's doing. I generally don't expect that to change in the future. Number two topic on Mile is regarding third-party data. I know that a lot of you have to rely on these data sources for your analysis.

I'm talking about you, the analysts, and investors. We also know that in Grindr's case, they regularly are incorrect in what they project. 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, and it's impossible for us to help them along. We count Mile using unique devices. We think that's the most accurate way to do it 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. 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 as two people in a given quarter. We go down to the level of device.

While I totally appreciate the reliance on third-party data, I think the reality is that our numbers speak for themselves, and I think Mile is going very well. Lastly, with regards to long term, we do think there's a lot of opportunity for what we can do. Grindr's Mile growth 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 come to us. We think there are a lot of things we can do to help that along. I'll talk about two buckets, one in marketing and one in product. 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.

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. That's something we've not done and are working towards putting resources behind. Additionally, the same brand debt that Grindr faced in the United States three years ago, which I think we've done a lot of work to correct, we need to do similar work in other parts of the world, Latin America in particular. We're starting that in 2025 and will continue into next year as well.

On the product side, part of the concept behind intentions-based products, which we've been talking about for a long time now, is that there are people who might have a Grindr account but not use it as much because Grindr is very general in terms of what its 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. 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. 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. On your second question with regards to TAM, there's two ways to think about TAM.

You can think of TAM as just the number of people that Grindr could bring on board. 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 the Philippines, et cetera, where people are only now starting to come out and become comfortable with their sexualities. Growth opportunity there with TAM is huge. I also think another way to think of TAM is just dollars that we can go after, the total amount of revenue we could amass. Our strategy is to both make Grindr the core product really great, but also to build these long-term new businesses like Woodwork and the health vertical where we can sell more things to our users and offer them more services.

From that point of view, we think that TAM can expand dramatically since obviously healthcare alone for our users is a huge opportunity to expand TAM. There are other areas like travel that we are going to go after next that add more to the TAM. We think TAM is big and growing. That's on your first two questions. Happy to answer the third.

Great. Thanks, George. On the mapping announcement, it's exciting. Could you talk more about the potential of mapping and what it could mean for maybe other product initiatives and use cases outside of like our Right Now or Explore looking forward?

For mapping, I just want to make sure I heard it right. We released in the shareholder letter, we talked about the fact that we released map features in the app. This is something that users have asked for for years. Grindr is very location-based, and immediacy around you is very important. People were always like, can you actually show us on a map how far somebody is? We started to do that both in the Explore feature as well as in Right Now. 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. 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.

That allows us to basically help users understand, hey, these are the areas where usually people are present. If I want to search for people or if I want to figure out where to stay, etc., I can use that data to do that. 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 neighborhood growth verticals. Things like identifying where to stay, where to eat, what kind of activities might be happening around you to go to. That can be used by people locally, right? 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.

Those are the kinds of things that we envision long-term mapping to help with, and we think it'll be very valuable. In the past, historically, it was a complicated technology to enable in the app because of the mobile nature of our app. Now technology is in a place where we think we can do it really well, and we're excited that it's out.

Great. Thank you.

Speaker 5

Your next question comes from the line of Andrew Boone, Citizens JMP. Please go ahead.

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? On operating expenses set up this quarter, can you walk us through the key drivers behind that increase? Is this reflective of ongoing investment, product, marketing, or headcount? How should we think about investments going forward? I have one more question to that.

Speaker 3

I'll take the first question on indirect revenue, and then I'll hand over to Vanna to speak about expenses, and then happy to do your next question as well. 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 underinvested 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. We have a very desirable user base, people that are very much trendsetters for the world in general, not just for our community. Their income is higher. Their education is higher as well overall. There is a ton of opportunity with them both for advertising, 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. That part of the business has done exceptionally well. I frankly don't think you could ask for anything more than what they've delivered. The growth numbers have been stunning, with 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. 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. It's been really successful. We've also added new formats for the types of ads that we show.

For example, a rewarded video, which also helps us increase the CPM and do well there. I would expect rewarded video in particular to be a big growth lever in 2025, as we start a big growth lever in 2026, like 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. 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.

Lastly, I'd say the one area where 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. That has to do with direct advertising. These are ads that we partner with specific brands to do. We have a very good brand business. It's done very well as well and has grown significantly. The categories of verticals that we've added to the brand business or specific companies that have come on board are much lower than I think any of us had hoped would be the case today. That's not so much on Grindr anymore.

We've done a lot of the work that we needed to do in our product to bring them, to have them come on board, whether it's getting them data that they need or the types of ad formats that they want. What happened two years ago with Anheuser-Busch did set us back in a pretty significant way. People, you know, I think people like brands are worried about advertising. I think there we just need to continue to hammer the point that Grindr has a very desirable audience of trendsetting higher income, wealthier men who spend a lot of time on the app, and it's a great way to reach them and do a good job in kind of pitching our story to them, as I think we've done in other places. We're not going to give up.

We think that there's still a ton of opportunity in the direct business to grow. I'm very happy with the indirect business's performance this year and in the past, and we expect them to continue to perform really well. With that, I'll pass it over to Vanna to talk about expenses.

Speaker 2

Hi there. 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. That is bringing along a little higher cost. We also have some accruals that were put into place in Q2. 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, I would say that you're just seeing a more flat-ish expense base in every quarter, and the margins are reflecting that at 43%, which is right on where we thought we would be.

Got it. Thank you. You mentioned in the letter that you're experimenting with pricing in existing tiers and testing subscription as you guys add more value. I understand 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? That's it. Thank you.

Speaker 3

I do want to reemphasize that none of the pricing changes or experiments that we might do will be material to this year, and no one should kind of count on those for 2025. I think that's really important. Most of our focus for the rest of this year as a Product team and an Engineering team is around driving revenue growth next year. 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 enabling that. 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 $99.99 and $39.99.

If you just look at inflation from that period of time, from 2018 to today, that would push our Extra price to something like $25.50 and our Unlimited price to $49. 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. That would imply that there is a lot of room just purely on inflation for us to increase prices. 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, we think there is some level of opportunity there. When I say we've added new products, we've added a ton of free products or premium products to the experience, like Right Now. You get a lot more of Right Now if you're a paying user.

We've added albums which are available to everybody, but you get more album capabilities if you are a paying customer. In addition to that, there are specific products that are just 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. When we released our three-year plan, we talked about the fact that there are two ways we could go about reaching our long-term goals. Either one of them could get us there, but we wanted to do both. Number one was to get more users to pay for Grindr. Number two was to get people who do pay for Grindr to pay more for all the value-added services and products that they are getting from us. I think we've done very well with getting more users to pay, and we'll continue to do that.

Now there's an opportunity for us to start looking at getting revenue from all the value that we created for users. 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. As you see prices change, don't assume anything on that. This is experimentation and a test learning process that we're going to go through over the next many months as we decide what the right place to be on price is. Operator?

Speaker 5

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. There are no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you, everyone, for joining. You may now.