Grindr Aktie

Good day, everyone. My name is Dannie, and I will be your conference operator today. At this time, I would like to welcome you to the Grindr First Quarter 2026 Earnings Call.

[Operator Instructions] At this time, I would like to turn the call over to Tolu Adeofe, Director of Investor Relations. Thank you.

Hello, and welcome to the Grindr Earnings Call for the First Quarter 2026. Today's call will be led by Grindr's CEO, George Arison; and CFO, John North. 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. 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. 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, 2025, or any subsequently filed quarterly reports.

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.

Thanks, Tolu, and hello, everyone. We delivered exceptional results in Q1 2026. Revenue grew 38% year-over-year with a net income margin of 21% and adjusted EBITDA margin of 45%. We have now shown repeatedly that when we improve the product, expand the value users get from Grindr and monetize thoughtfully, the business responds.

Given our Q1 performance and what we can see today, we are raising our full year outlook and now expect at least $535 million in revenue and at least $227 million in adjusted EBITDA for 2026. I will focus on a few highlights. And as always, I encourage you to read our shareholder letter, which goes into significantly more details on these topics as well as a number of others.

Our focus in 2026 is clear, making Grindr a more useful day-to-day, more personalized and more valuable across a broader range of user needs and intentions. That means continued work in the core app, including Right Now, Maps, Health Center, significant rearchitecture and broader deployment of gAI.

We're also driving towards the global rollout of Edge, our new premium tier. Built around our gAI capabilities, Edge is designed for power users who wants the most advanced experience current technology can offer. Based on user testing, we expect that Edge will command a significant premium to our current subscription offerings and anticipate that it should be our largest driver of revenue growth in 2027.

As our offerings expand, Grindr's position in the market is broadening as well. We are staying true to and strengthening our core use case with Right Now while also becoming a broader and more durable category leader, serving one of the most culturally influential communities in the world across many use cases. That is what the Global Gayborhood in Your Pocket means, now moving away from what is core to Grindr and to gay life, but building outward from it into a product, brand and platform that play a larger role in the lives of our users.

Over time, we aspire to be not just a known brand, but a loved one, with greater cultural relevance, broader utility and the ability to expand into adjacent categories where our relationship with users gives us the unique right to win. Our recent Madonna partnership is a strong example of that strategy in action. It is a major in-app activation ahead of the global release of our new album, Confessions on a Dance Floor II, and exemplifies the content partnerships component of our product and business.

It also is reflective of Grindr's position and culture. Our users do not just consume culture, they help shape what breaks and what matters. As we introduce more elevated experiences, Grindr is also becoming a more premium platform, one that's able to attract iconic partners and create new forms of value that strengthens the brand and expands our positioning well beyond that of a narrow-use-case app.

We also continue to build our advertising platform as a meaningful driver of long-term growth. A strong free product remains essential to the health of our network. And this year, we are taking steps to improve the free experience meaningfully, including reducing certain ad triggers, expanding rewards-based advertising and rearchitecting the front end of our iOS and Android apps.

Activations, reactivations and overall engagement remains strong, and retention is improving, notwithstanding pricing changes. These strong engagement results are clear indicators that the product quality is getting better. While our MAU growth remains strong, in a small number of international markets, we are also seeing MAU headwinds from 2 types of government actions. First, certain new age-assurance rules lead some adults, including those particularly focused on privacy to drop out of the account sign-up or login flow prior to even entering the age assurance process.

Separately, and far more troubling for our users, we face real pressure in certain countries with the repressive policies against members of our community like Malaysia and Indonesia. We estimate that in total, MAU would have grown by an average of 400,000 more in 2026 than the current full year trajectory if we were not facing these 2 distinct factors. This is not financially material to us for reasons discussed in my letter.

We are continuing to strengthen Grindr for the long term on behalf of shareholders, including nominating 3 new independent directors for election at our annual meeting, and as John will discuss, beginning execution under our expanded share repurchase program.

Overall, I could not be happier with our fantastic start to 2026. The team is executing exceptionally well across technology, product, brand and the business more broadly. And I'm very proud of and grateful for their hardcore approach to everything we do. Because of their dedication, we believe Grindr is set up to deliver strong growth this year and next, and we are excited for what lies ahead.

With that, I'll turn it over to John to walk through the results in more detail.

Thanks, George, and hello, everyone. Q1 was strong across the board, as George highlighted. Revenue grew 38% to $130 million. Adjusted EBITDA was $58 million or a margin of 45%. The performance was driven by strength in core app revenue, including our pricing changes, but also better conversion and retention as well as ads.

App-based revenue grew 33% year-over-year and ad revenue was up 68%. In ads, we have our first big year-long direct ad campaign, which will take our ads revenue up into the mid-to-high teens as a percentage of total revenue for 2026. That's netted against moderation in third-party ad loads that we began implementing in the first quarter in connection with our priorities around user experience and ecosystem health. In 2027, we expect ads as a percentage of total revenue to normalize back to the 15% range that we've historically delivered.

Adjusted EBITDA grew 44% to $58 million or a margin of 45%. The strong result is an outcome of both the revenue outperformance and the timing of planned expenses. In our March call, we communicated that we planned higher investments this year in support of our priorities for the business. While these investments began to flow through the P&L in the first quarter, we expect to see that pick up in the second quarter as we execute on planned product and tech development initiatives as well as marketing in support of the brand initiatives George highlighted.

Turning now to share repurchase activity. This is detailed in our shareholder letter, but I'll call out that we retired 8.3 million shares of our common stock in the first quarter. Across December and the first quarter, we've deployed approximately $140 million in authorized repurchases. We've used a variety of mechanisms, including prepaid written put options, an accelerated share repurchase, and forward repurchase transactions so that the capital deployed will -- so far will settle over time through the third quarter of this year. We have $350 million remaining in our current buyback authorization.

Now for our guidance. We are raising our 2026 outlook to include revenue of at least $535 million and adjusted EBITDA of $227 million, a $10 million increase from our February outlook. The increase in estimated revenue reflects stronger payer conversion, which is continuing into the second quarter and the lift from the brand campaign. Keep in mind that we expect our growth rates will moderate in the second half of this year, in particular, in the fourth quarter as we anniversary the rollout of our pricing increases.

A higher adjusted EBITDA outlook reflects the stronger revenue picture and continued strong AI leverage in engineering, offset somewhat by the planned investments we discussed, which are starting to increase in the second quarter. Overall, we are excited about the strength of the business, and we'll manage with discipline as we execute on our plans for the year as we always do.

And with that, operator, let's open up the call for questions.

Our first question today comes from Nathan Feather at Morgan Stanley.

Congrats on the strong quarter here. Can you provide a little bit more color on what you're seeing in the testing so far for Edge, both in terms of consumer receptivity to the individual features along with the price receptivity? And then even though it's going to be the major driver for 2027, I guess, how should we think about the rollout timing here?

Nathan, good to talk to you. Great question. We have a lot of data on Edge from the testing that we've done. So I'll split that into 2 things. On the product side, a bunch of the features that are all in Edge have actually been tested for quite some time in 2025. And so we feel really confident about the product experience that we've created and about the features that we've built and that users really will like them, and it will be a really great thing for the product overall.

Where we are really focused on now is pricing. So we've done one pretty big price test in an English-speaking country, not in the United States and got really good results, which tell us that Edge will be priced at a significant premium to what we offer today, incrementally more. And that gives us a lot of confidence that Edge is a very good home run.

And what we're now spending time on is determining whether Edge can be a grand slam with a higher price point. But the key to that is having better clarity around how we want to position it in the product and kind of the marketing that we want to do around it. Edge is not designed as a product for mass consumption. It is built for a small number of power users on Grindr.

I think someone's asked me in the past, and I said anywhere between 0.5% to 1 percentage point of our MAU being in Edge after several years, I would view as a really powerful outcome. And so we're now looking at that kind of marketing piece of it and how to position it into the market and how to then price it based on the value that users are getting. The value equation is really the critical thing for us. So we feel really good about where Edge is headed.

We are going to put another test into the market later this Spring or perhaps in June. And then based on those results, we'll have a better sense on when we want to launch it. For us, the really critical thing is to have it be ready for 2027. That would imply late 2026 or early 2027 launch. But we're doing so well this year and everything is firing on such kind of -- in such a strong way that there's no rush to put Edge into the market. We think that getting it right and making sure that it can be as big as it can be and unleashing its full potential is where we would win the best.

Great. That's helpful. And then just one more for me. 1Q revenue growth, really strong, but also kind of tracking well ahead of the full year guidance. John, can you give me a sense of the shape of revenue growth over the course of the year? And then what are the major puts or takes that could lead revenue growth in the back half to be a little bit higher than we're expecting here?

Yes, Nathan, thanks for the question. So I'd break it into a few, I guess, topical comments to help frame it for you, and we alluded to this in the prepared remarks. We've certainly got a benefit from the pricing increases that we introduced at the end of last year. That was planned, that was baked in our forecast. That was in the numbers we gave you when we introduced this year. I think we have a little bit of upside there in the quarter because we didn't see the typical churn to the degree that we would with pricing increases happening.

So there was a little bit of a benefit there. The direct ads business we talked about has that large benefit this year with the campaign with one of our key partners. And that came in a little -- I would say, a little faster than we expected in the first part of the year. And so there's going to be an impact in the back half of the year as a result.

And those are the 2 kind of big drivers that push things ahead for us in the first quarter and led us to be confident enough to raise what our outlook was for the year. But on the back end of that, it's exactly what you flagged, which is that we're going to see a deceleration in the third and the fourth quarter. Some of that's a function of having a really good fourth quarter last year where we outperformed. So it's a tougher comp. And some of it's really just the product cadence and how things are going to launch this year, which is exactly what we're expecting.

We did also mention that we're investing in the future. So our margin is an important thing to talk about as well. We're expecting that to be impacted through the year because we're bringing on people, and we're investing in products and things that are not revenue generating that are going to set up 2027 and beyond. And so that's all kind of what's in the thinking and happy to dive into that in more detail with you offline if we can be more helpful from a modeling perspective, but we are anticipating a bit of a deceleration in the third and particularly the fourth quarter to get to that implied full year number, which is exactly what we're anticipating.

And George, maybe can talk a little bit more about some of the specifics around the product side.

Yes. So if you look at Grind's history over the last 5 years, usually a step change in revenue, kind of new revenue has come from something significant that we've launched on the product side because we are a product-driven kind of revenue company. So if you look at, say 2021, we launched more profiles that led to a big step change in revenue growth. In 2022, we launched Boost middle of the year that led to a big growth in revenue in 2022 and then in 2023.

In 2024, we launched weekly pricing for Unlimited that drove growth in revenue. So for our business to continue to grow revenue in a significant way, we need to launch the next big thing kind of in a reasonable time frame. The last big thing we launched was the price change, which was a way for us to monetize the value that we have created for users over the last 2 to 4 years. And the results of that have been really strong. Churn is down, reactivations and activations are up, which is not what you'd expect to happen when you raise prices, but I think it speaks to the fact that we have created a ton of value in the product, in our paid tiers and users are recognizing that.

So, given that we started the price increases in Q4, then for us to have another step change in revenue growth in Q4 of this year, we would need to launch some big product. That next big product is Edge. And as I spoke earlier, we feel very confident about how well Edge will do, but we might not launch it in Q4. And that would lead to deceleration in Q4 and then acceleration looking into 2027. And that year, obviously, is looking really good from that point of view as well.

Our next question comes from Andrew Boone at Citizens.

I would love to ask about 2 things, one near term and then maybe one more that's strategic. George, how do we think about Match and Sniffies in the competitive environment now that Sniffies may have a larger balance sheet and funding behind it? And then as we think about your platform evolution here, it's really clear that there's a bigger picture strategic view. Can you bring us more into financial terms for us and talk about the benefit that we should expect in terms of shareholders from the broadening of the platform and what that could mean from a financial lens?

Great. Thanks for the question. So on Sniffies, I'll start with a congratulations. We've gotten to know the Sniffies guys over the last couple of years. I've spent time with Blake and his brother and I'm very happy for them. They were looking for liquidity, and I'm very glad that it happened in this powerful way.

I'm also a little bit happy for Grindr because this investment really speaks to the work that we've done in getting the public market used to a company like Grindr. If you look at where we are today versus where we were 3.5 years ago, the world has fundamentally changed. And so I think our team has done a really fantastic job in letting people understand what Grindr is and how big the opportunity space here is. I don't know if people know, but about a decade ago, Match really wanted to buy Grindr. And the team was really behind it and they got blocked by the Board. So it's awesome that we're now past that and there was acceptance of investing in Sniffies.

As far as the competition for us, we always pay attention to competition and Grindr had plenty of competition from the day, frankly, it started, right? Grindr was not the first digital gay product. Manhunt and Adam4Adam were by far the dominant platforms when Grindr launched. And ever since then, Grindr had competition. And so, we always pay attention to competition and it obviously matters.

But from our perspective, what really matters is us being the product that people go to first in wallet and spend the most amount of time in and are most engaged with. And by every metric that we have internally, that has continued to be the case. And frankly, in some respects, it is accelerating. Like in the time period that I've been at Grindr, the amount of time that people spend on the app has only increased. And so, we feel really good about our position in the market and what we need to do on a go-forward basis.

Sniffies is a different product, and it serves a very specific use case. So Sniffies entered the market when Craigslist eliminated personals out of concern for sex trafficking and that opened up this space for cruising for people who were using Craigslist before and was a very heavily used product. And that's the kind of space that Sniffies has captured. We obviously have a much broader set of use cases that really kind of offer users many different things. And so we feel we're in a really good place in that regard.

And again, there's place for more than one product. We know people use more than one product and that's probably okay. So we are focused on executing our strategy, and we're speeding up, not slowing down. That's how I think about it.

On your second question on the platform, when I joined Grindr and frankly, for the year before I joined Grindr when I was learning more about Grindr, the assumption I would hear from everybody was the best way for Grindr to make more revenue is to get more people to become payers. And there is logic to that, right? The Grindr was at sub-6% payer penetration and our peers in the straight category are at 15%, maybe even 20%. And so it would make sense that you could convert a lot more people to become payers.

But our -- and we've done a bunch of that, right? We've gone from sub-6% to 8.5%-plus and that's with MAU growing pretty significantly. So if we had stayed static, we'd be over 10% payer penetration today. But ultimately, the free experience on Grindr is really, really critical. And that's the reason why everyone comes into the product on a regular basis as they become adults.

And so, from our view, the better way to monetize on a go-forward basis is to create value-added experiences for people on a premium level. And hence, why we're building Edge and a bunch of other premium experiences inside the product.

So from that perspective, creating a more upscale experience for our brand is something that will help a more elevated and a more premium experience in the product. And that will be the primary way in which we drive revenue growth in '27, '28 and beyond. By the way, none of this is new, like this is what we had set out to do when we talked about it in Investor Day. We're just executing on it at roughly the time line that we had expected we'd be doing.

And George, I'll just hop in. I mean on the longer-term margin question, that's really not the primary focus for us. There's certainly a world in which we could continue to turn levers within the business to improve the EBITDA margin, whether it's more payer conversion, whether it's getting more productivity out of people, whether it's figuring out direct payments, so we don't pay so much in fees to the App Store. There's things that can be done, but that's not been the primary focus.

Growing the revenue base overall and diversifying the revenue base in different ways is where the focus is, and we're consciously investing and taking a view to the future, both this year and beyond, to continue to create the growth avenues for Grindr, which is more important to us. So I would much rather see an improving growth rate as opposed to an improving margin percentage.

Our next question comes from Andrew Marok at Raymond James.

Maybe first on the age-assurance issue. We've seen some other companies in the digital media ecosystem kind of have variable results with how they are impacted by age restrictions or age checks. So I guess what are some of the key learnings that you've seen in the geographies where they've been required so far? And how can they inform future potential implementations to kind of minimize the friction of engagement or sign up based on the particular concerns of the Grindr community?

And then maybe second on advertising. Great to hear about the full year campaign. I guess, was there anything in particular that got this company to come on and make a big campaign? Or was it just kind of fortuitous timing and how the pipeline of those bigger deals might be?

Thanks for the questions. On age-assurance, I always want to start by saying Grindr is an 18-plus product. We don't want anybody under 18 using Grindr, and we are really strong proponents of App Store or phone-based age verification, and we've endorsed federal legislation that would mandate that at the national level, and we've supported legislation in California and Texas and Utah that's achieved that as well. And I think that's really, really important. I'm a dad and I don't want my 6.5-year-olds being on Grindr, and I don't want them touching Grindr until they're 18, and that's something we believe in really, really strongly.

The approach that some of the countries have taken internationally at mandating age verification at the app level comes with a lot of challenges to the user. It means that a user has to validate their age in multiple apps, which obviously increases the risk that their information will come out. And we have a set of users -- because something is leaked, et cetera. And we have a set of users who are extremely privacy conscious. Oftentimes, there are people who are still in the closet, who are very, very discrete. And these adult users, and I want to be very clear, we're talking about adults, just simply choose to drop out of the process before they go through the age verification flow.

We actually have a pretty good age verification flow. We use facial recognition to determine if you are of age first and only if that technology is unable to determine that you are over 18, do we then put you to a secondary flow where you have to show ID. But even that process alone gets some people to drop off, and these are adults, not people who are under-age. And so we think that the alternatives to that, which is the App Store or mobile device-based verification is a much better approach, and that's what we're going to keep advocating for. But obviously, we'll comply with laws as they happen.

It has impacted MAU growth. To be very clear, MAU is still growing very nicely actually, but MAU would have grown by an amount larger than what it's going to grow this year if these rules were not in place in some of the countries. And I would expect more countries will adopt rules that are similar to this. Though again, we're going to continue advocating for App Store or device level verification.

On advertising, so maybe to step back a little bit on the ads business overall before I answer the specific question. We've had incredible success with that business. We went from a roughly $30 million business in 2022 that was decelerating and frankly, didn't really have a path to grow to a business that, based on guidance that we've shown you, is going to be over $90 million this year. So that's tripling the business in a 4-year period, which I think the team deserves nothing but huge congratulations for that.

And we've said at Investor Day, we want -- advertising is going to be kind of roughly the same percentage of revenue as it was in 2022, which is roughly 15%. That meant that the ad business had to grow faster than the core business. And again, it's achieved that. So I'm very, very proud of what the team has done. At the same time, where I've probably been most disappointed in my time at Grindr is that getting the direct ad business where brands come and work directly with us has not been as successful as, frankly, I would have liked it to be.

We hear from brands a ton that they want to reach our type of audience that is tastemaking, that has high disposable income, et cetera, but they're not willing to put dollars to work on Grindr. And that's still work that we have to do from the brand perspective, on our brand. That's the work that we have do from a technology perspective and creating the technology that advertisers want us to have in the application to help them advertise as well as from a data perspective, like what are they actually getting in return. Grindr is a great place to advertise from the point of view of building your brand.

It is not a direct response type of a channel because people are in a different mindset when they're on Grindr. They're not actually looking to kind of transact on something else when they're in the app. And so that obviously creates a special way of pitching the brand perspective of it. People are very used to buying direct response ads, but less so for what we offer.

I'm still very bullish that over the long term, we will win in that direct advertising business, but I think it's going to take us a really long time. That doesn't mean that the ad business cannot grow. We expect the ad business to keep growing in the years to come and to stay at that 15% of total revenue baseline that we had in 2022 and that we've aimed to maintain. So there's still a ton of growth for the ad business.

I think we'll continue to see a ton of positive results from Rewarded Video, which actually makes the user experience in the app better as well. So that's one of the things that we are seeing a lot of traction with. With this particular advertiser, we had been working on them for almost 2 years, and they had been advertising with us during that period of time as well. It's the same advertiser that had a big push in Q4 of 2024, you might remember, when we had a big uptick in revenue as a result of that.

So we have a relationship with them. We're really happy that they're advertising, but I wouldn't expect something similar to repeat in 2026. Hopefully, we can create more opportunities for bigger direct advertising partners in 2027 -- sorry, in 2028 and beyond.

Our final question today comes from Logan Whalley at TD Cowen.

First, to ask about discrete mode and kind of how you think users will engage with that feature looking forward? Do you expect this kind of opens up a new use case with the app or maybe just changes how people engage with the app? And then, secondly, on your plans for incremental hiring in the middle of the year, where do you expect that headcount efforts will be directed towards within the business?

Great. Well, I'll take the first one, and then maybe John and I can split the second one. So on discrete mode, discrete is for Right Now specifically. So it's not a -- you can -- not to be discrete on the app overall. We already have a way for people to browse the grid without actually showing up on the grid if that's what they want and some people do want that. But this is for Right Now.

What we heard from a lot of users who we surveyed or got feedback from was that they want to post in Right Now, but they don't want their posting in Right Now to be connected to their profile on Grindr because a lot of people have friendships on Grindr and for discretion reasons, they don't want to be telling everyone they know, "Hey, I'm posting in Right Now," which is perfectly reasonable. And so the discrete mode has enabled that capability where a person can post on Right Now, will receive messages from other people who are in Right Now or who are interested in Right Now. But you will not be able to see the connection to your regular profile and that way you kind of keep that discretion.

So, that's something that people really wanted. I think it's going to be a good feature in making Right Now a better product for people who want that. But there's a ton that we're doing with Right Now that I'm not yet in a position to publicly talk about that I think will keep making that experience better and better for people. We have a very large percentage of branded users that use Right Now on a multi times a week basis. And so we're really happy with that, but we still think there's more that we can do to make it even better.

When it comes to hiring, we definitely went into -- we've been behind on the number of people that we need for quite some time, right? I am known to run a very lean operation. Grindr has over $2.7 million in revenue per head at the end of last year. And so we felt that we need more people. And we had a fairly aggressive hiring plan for the year. We are probably -- we're doing very well on hiring, but I don't think we're going to end up hiring everyone that we had envisioned, and that's reflected in the EBITDA margin or in the EBITDA raise that we gave for the year in this release.

One of the reasons why we won't probably hire everyone is because how we work is fundamentally changing. We've said in the past that our engineers are self-reporting that they are 1.5x more productive than they were 9 months ago. We now have teams of -- on the product team that are being -- small teams of 4 people are able to produce as much work in a week as teams of 10 or 20 people would have previously produced in the course of a month. And that's all because of AI.

The roles of engineer, product manager, designer, data scientists are all kind of collapsing in that now they are all doing all parts of that work, meaning a designer can code and function as a product manager or a product manager can code and also do design. And so we're terraforming this business to be an AI-native business. It's is really changing how we work and the amount of productivity you're getting from the teams.

And as a result, we -- given how lean we are, we don't have the same problems that a lot of other companies have. But we do -- and we still need more people in terms of hiring, but we do want to be judicious in how we hire and who we bring on board because we want them to be much more AI native to fit in this new mode of working that we are now evolving inside the company.

I don't know, John, if you want to add anything to that.

I would just say the 39% to 42% EBITDA margin is healthy. As we talked about on an earlier question, even as the CFO, if you told me I could grow revenue or I could grow margin, I would choose revenue right now. I think that margin optimization isn't the most important thing. To George's point, the guidance and the plan that we had in place contemplated hiring and investing in the future and that it was going to impact margin as a result, which it did.

But also to his point, we've been able to increase that because the plan has changed as we've evolved. And I do also echo the sentiment that we're investing in the business in other places, which would include like investing in marketing efforts and spending more money there. And you see us doing more, I think, culturally-relevant events like the White House Correspondents' Dinne or partnering with Madonna on our album launch. And those are things we're doing that are marketing investments outside of attracting users to the app. They're really about improving our cultural relevance and what we bring to the community and to the user base overall.

And we've been working our way through that, testing those things. And then I think as we've achieved success, in some of these events and these touch points that become these cultural flashes, we have more confidence to invest some more money in marketing because it's working. And so those are the kind of things we're thinking about and balancing.

And certainly, there's a case to be made to just optimize for margin all the time, but that really doesn't give us the trajectory to execute on the vision that George has laid out to really continue to round out the app in many different ways and to expand the number of modalities in which we can reach revenue and reach users.

That concludes today's call. Thank you for joining. You may now disconnect.

Okay. Great. Good afternoon, everyone. Thank you so much for joining us. My name is Nathan Feather, and I am Morgan Stanley's small and mid-cap Internet analyst. I'm excited to be joined by George Arison, Grindr's CEO. Thanks so much for joining us.

Thanks for having me.

Now before we begin, a quick housekeeping item. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

And with that, let's kick it off. So George, for investors new to the story, can you give us an overview of the Grindr business and how it's evolved since you joined?

So Grindr is the largest social network of gay people in the world. By far, there's nothing really as large as us or even close to it. 98% of our users are gained by men all over the world. We are in almost every country in the world, except for the ones that U.S. has sanctions on, including Iran, although we have gotten a lot of requests from Iran to be available there. So hopefully, not in too distant future.

And we've been around for almost 17 years now. The product kind of took off like Wildfire when it launched on iPhone and has grown every year ever since then. Grindr became public in 2022, and I became CEO that year as well before we went public. What we've been focused on as a business is really three things since I've been here. Number one is preserving the core free product to be as strong as possible. We have a very robust free product, and we want it to be as good as it can be and frankly, better than it has been so far.

Number two is driving monetization by getting either users to convert to become payers or getting people who are already paying to pay more because of the value that we're adding to the product for them. And I think that's been successful so far. We're probably shifting a little bit from focusing on conversion to actually driving value from people who are already paying on a go-forward basis.

And then thirdly, thinking about new initiatives or new business lines that we can build out that can serve this core audience, but drive new dollars to Grindr outside of our core product. And so we know that our users are spending money on other things as well, which we believe we can provide to them better than some of the other providers might and like how do we launch those products and how do we bring those dollars to Grindr, which is not going to be something we'll see in the bottom line in the next year or 2 years.

But over the long term, we believe we can establish that to be a bigger part of the business that we have more revenue sources than just one core app.

Okay. Great. Now thinking of the financials at your Investor Day back in 2024, you outlined targets for 2027. revenue of about $600 million, adjusted EBITDA of around $245 million. How are you tracking towards those targets? And what will be the one or two key drivers over the next 24 months to help you attain those goals?

So based on our guidance, I think we're tracking really well. We finished 1 year of the 3 years that -- because we really gave 3.5 years at Investor Day. So we finished the first 1.5 years of that guidance, and now we're in year -- full year 2. Based on what we said for about 2026, I think we're tracking really well.

I think $528 million for revenue and $217 million for EBITDA. And we're really happy with where the business is. I think we've launched products at a really good pace. Feedback from users has been really good. The productivity on the team is very strong. And so I've been very happy with the results, and we should be able to achieve everything that we set out to achieve.

And beyond that, while we haven't given guidance beyond the third year, which will be 2027, there's nothing that's happening at Grindr today that makes me feel like we can continue on a very similar trajectory into the future. The big thing for us is going to be where the revenue comes from. We had outlined at Investor Day that we will be building products focused on intention and finding what are the intentions of our users and how do we serve them for those intentions with features.

One intention is right now, another intention is around relationships. A third intention is something like travel, and we are doing that. And the takeaway in doing that is that people are very willing to pay for premium products and premium services.

For example, last year, we tested what we call Mega Boost. So boost is the way people can boost their profile for more people to be able to see it. And historically, we've had like a $9.99 boost and as well as a $19.99 boost. And just -- I mean, literally totally randomly, I said, well, what if we tried like a $99 boost? And we did. And it turns out that actually a really large number of people will pay for a boost that lasts 24 hours, whereas the previous one only lasted an hour or an hour plus was specialized in who you targeted at and are willing to pay a lot of money for it.

Now $9.9 was a bit of a stretch. They're only willing to pay $59.99, but that's still a lot more than we were charging previously. And so what we are finding is that for the segment of users who are Grindr's power users who use the product a lot and who like the value-added services and have disposable income to the point where they can afford to do these things, there is a much higher limit to what they're willing to spend than we might have thought previously.

And so a lot of our monetization will be focused on those users. And the benefit of that is that then we can take some of that revenue and invest it back into the free product experience to keep the product -- free experience really robust since having more free users makes all users happy where they're paying customers or free customers.

Well, I want to get into a lot of those things. But first, since the proposed take last year, there's been a lot of noise related to ownership, governance and share pledging. Can you talk through the latest on those topics and the changes the company has made to the corporate governance structure?

Thanks for that question. That's probably the toughest question I get. And I get it, unfortunately, too often. So good to talk about it. I fully appreciate how that's really important to shareholders.

Again, they ask me that as well. And so we know and I think the Board knows that as well and is very focused on these issues. So to start with, the issues with the margin call last year and what happened, and James is no longer on the Board. He has stepped down as Chairman and as a Board member. And I think that was addressed kind of well.

And number two, we have a very independent Board. That was something that was very important to me coming into this job that the company maintained a majority independent Board. Now the Board is overwhelmingly independent. And I think has shown its independence in a pretty strong way given the actions that it has taken over the time that the company has been public, whether it was in terms of addressing the warrant overhang or in how it dealt with the proposal to go private last year. It formed a committee.

The committee valued the proposal and responded. And there were other analysts who thought that the deal was done just because it was made by majority shareholders. And clearly, that was not the case, which I think speaks to the independence of the Board. When James stepped down, we were really fortunate that Michael Gearon stepped in as a Lead Independent Director. Michael literally is probably among the top entrepreneurs in the United States over the last 30, 40 years. And so it's awesome for me to have him be in that role. He's been a great mentor to me, and I've learned a ton from him. And the Board is actively working on adding more independent directors to it, not something we started out just last fall. We had been working on that previously.

We added Chad Cohen as the Chair of the Audit Committee in May of last year. And we have two different recruiting firms helping us fill out the available slots on the Board for the shareholder meeting coming up this summer. And so I think we'll have some more names to announce in the coming months.

And then lastly, Ray is our largest shareholder and my relationship is really strong. I really like working with Ray. He is very committed to the long term of this business. I think the reality is that Ray, Michael and James in buying this company from China's ownership through a U.S. required divestiture actually saved the product for the user base and have invested significant resources over time into ensuring that the product remains really strong, and Ray has been at the forefront of that.

And as -- I'm a founder at heart, I have built companies from scratch, and you always want investors who are as optimistic as you are about things when you are a person like me because you believe that anything is possible. And oftentimes, investors are the ones that are kind of keeping you more in check with reality.

Well, Ray is the kind of investors you want to have as a founder because he's also super optimistic about the future and always believes that more can happen. And I think that's really positive to have that kind of a voice on the board. He obviously has a ton of expertise in areas that I'm not as of an expert on like capital markets, and I think that's also super helpful.

So my relationship with him is very strong, and I think he remains a very committed shareholder for the long term of this -- so those are the things I'd say kind of on that topic. I realize that there's more to do. I think the Board realizes there's more to do, and we'll continue to work on those issues for the future.

Very helpful. Now back to the financials. So I just had earnings last week, guided to fiscal '26 revenue growth of at least 20% year-on-year. Can you walk through the puts and takes as you were thinking about putting together that revenue guidance? And what key changes are included within the 20%? And then what are the one or two things that could deliver the most upside?

Yes. So we -- just to step back on how we guide, and this is really very much driven by my own experience because I was a private company CEO before Grindr. I then took that company public. And we went in a company through a SPAC process and had to give long-term and short-term guidance in the SPAC process, and we missed it the first quarter we were public, and that was very painful.

And I don't like going through those kinds of experiences. And so I tend to be really careful in how we give guidance as a result. I found that if you deliver 98% to private investors, they're really happy. But if you deliver 98% to public investors, they're usually not. And so we give guidance only to the things that we have clear line of sight to today. And then as the year progresses, we update guidance based on things that develop because obviously, we're not stopped and we're working on more things.

What had happened over the last few years at Grindr was that we created a ton of new value in our extra and unlimited tiers, which are our two paid tiers so far, but we never charged users for that value. So a lot of new features went into those products. And we put in some paywalls for free users as well, which made the tiers even more valuable.

But people -- but the price on the tiers didn't go up. Indeed, price on the tiers hadn't changed since 2018. And so last year, we started to look at whether we needed to change pricing to better align the value that the users were getting with the price that they were paying. And in August, we started to run some experiments on price tests.

The results were actually much better than we thought they would be in terms of people being okay with the price changes and not churning off being paying subscribers. And so we moved forward with those pricing changes in Q4 of last year initially for new payers. And that's going to percolate through in the first half of this year across the entire global ecosystem, including the current paying customers who are still on the old price. That is going to be the lion's share of our revenue growth in 2026, which is really monetizing all the things we had launched in '23, '24 and '25 this year and kind of harvesting that.

So I think that's really great for us because it's not impacting free users in any way. It allows us to kind of keep the free experience as robust as it is. What is not included is anything that we're doing on Edge. Edge is our premium tier that we are just testing now. We started testing it in Q4 of last year in Australia. Results on that were very strong. We're now running tests on that in a bunch of other markets, including a few U.S. markets, and I'm happy to talk more about that in a minute.

And we are really targeting Edge as a 2027 launch and for that to be the driver of revenue growth in 2027, in line with what we said at the Investor Day in 2024. But if the tests go well and we feel comfortable launching that product globally earlier, then there would be upside to what we are giving in guidance. And as the year progresses, we'll know more about that, and we'll update folks on that.

Additionally, last year, we started building our first gate expansion initiative, which is a business outside of the core app. That's what we -- how we call them. And that's Woodwork, which is our performance medications business as an anchor to our health business. Woodwork revenue is also not included in the guidance because it's still very early. So Woodwork has served many thousands of users and is ready for more scale, but it's still very early. It's only month 10 of it being in operations.

And so we didn't feel like including it in guidance made sense. So that's another area that's a pure upside. And then we have a few of our smaller products that have potential to have upside as well. So we I think that is the right approach for Grindr in terms of how we give guidance, and we'll update folks when we do the earnings again in May.

Well, thinking a little more holistically here, you mentioned of your three main priorities, there's increased monetization and improving the free user experience. I'd say that's different from a lot of similar companies where you're doing one or the other a little bit more strictly. And so interested how do you try and balance those dynamics there? What you're maximizing for? And I guess looking ahead, where do you see the room to really continue to improve that free user experience?

Yes. So when I started at Grindr and I came in as a tech CEO and I had started three different tech companies, I'd never run a subscription business previously before. The thing I heard from people internally and our Board and large shareholders as well as outside there like potential investors is, hey, Grindr is awesome because you have 6% penetration and Bumble has 15%, so much room, which made sense to me in some respects.

But as we learned more about the business, we realized that there's a lot more to this than just, hey, go from 6% to 15%. Now we have increased pet penetration significantly. We are now at 8.5%, which is way more than 6%, and the user base has grown from 12 million to 15 million. So if you hold the user base steady, actually, the conversion on the users we had back then is even higher than 8.5%, but it's actually much closer to where Bumble might be today.

But what you learn within the dynamics of that is that there's a big difference in who is the payer, and we released some of this data to investors last November, where our younger users, so people 18 to 30, tend to have a lower payer penetration. And then our older users, 35-plus, but especially 35-plus have a much higher penetration rate on being payers, which means that they're more willing to pay for these value-added services that they benefit from, whereas the younger users don't find that need to pay for those.

But we all want as many new people coming into the product as possible, especially as they turn 18 and start becoming kind of aware of Grindr and/or join as the rider passenger because they want to come out and figure out what it's like to be, et cetera. And so we want to keep that user base as vibrant as possible. And I think that's why we don't have some of the challenges that some of the other products have as far as the new -- younger users are concerned.

And so keeping that free product really robust for people who don't feel like they need to pay for it is great because they can mature to become impairs over time, right? We don't need to have them become pairs right away. Some of our straight peers are in a world where if you don't become a pair in the first week, you never become a pair.

But that's not the case at Grindr because with Grindr, as you age, you mature into becoming a pair. And so we do want to keep that very robust. And so we are less focused on kind of grow the payer penetration and more on saying, where is there revenue to be had with the people who already pay and how do we get them to be payers at high percentage rates and/or to be paying more than they're paying today.

As far as the free product is concerned, I think the single biggest thing we can do today for them is actually make the product be less buggy. And historically, we have had a lot of bugs in the product. A lot of it is an outgrowth of just the company history. Grindr was founded by a solo founder, 0 investment dollars put into the business. He funds it all himself and makes it be profitable like right away and then grows it from there and it kind of grows very quickly and exponentially. And it's all contractors. And so the initial code base is not great. And that just continued for a long time, then Grindr is bought by the Chinese ownership. They don't invest in the product at all.

They just kind of harvest the revenue and don't do technology investments. So then in 2020, when the company is bought out from Chinese, it's left with a very old code base. And we've been slowly chipping away at that. We've done all the back-end work. We hadn't done the front-end work. We started to refactor the front end of the product and rewrite a lot of the code last Q4. We are now well along on that. As one example, we said it in our shareholder letter last week for our Cascade, which is our front page, the main page that people go to, we went from 30,000 lines of code to 6,000. So we reduced the number of lines of code by 80%, which like is a significant change and the number of bugs that you could potentially put into that code base now is a lot lower.

So doing that across the entire code base, both on iOS and Android will be a big step forward for us. It's going to take about 1.5 years still, but I think it will be a big improvement for the free users. And then secondly, I think a really big thing that we need to focus on, and that will not be a change in 1 quarter. It's going to take some time is improving the quality of the ads that people see and the type of ads that they -- that is one of the ways we monetize it for users is through advertising.

We have a very robust and good advertising business at $70-plus million last year and continues to grow. But it's all third-party ads. We would prefer to have a lot more direct ads in the business that could both drive even more revenue but also be much more relevant to the user. And we can have other ad formats besides what we offer today, for example, reported video, which has much higher CPM when you show it, but it's also higher quality.

And so that's going to be another big area of investment for us this year, next year and beyond is taking this very good ads business and making it even better through better quality ads and more relevant ads that are more direct that will take some time to materialize, but I think will be very effective for the future.

All right. Great. Now one of the things the market has been really focused on is certainly MAU growth moderated a little bit over the past few quarters, nice improvement in 4Q. I guess, can you talk to what led to that recent slowdown and the path forward for user growth? And then just as you think about all the dimensions of the business, to what extent are you managing that KPI?

So we don't manage the MAU almost at all. And I realize that's very tough for investors because you all build models on how the business will do based on MAU, but that's not how we think about it internally. We have this very good flywheel where people turn 18, they come to Grindr and that just kind of happens on its own without us really doing much about it. Are there things we can do to impact MAU? Yes. Have we done them historically? No. Should we do them in the future? Probably, but it's going to take time for that to have an impact.

And most of it is going to be outside of the United States because we are pretty well penetrated in the U.S. and very well known. and I can talk about that in a minute as well. But historically, we have not managed the MAU at all. And internally, we don't really manage the MAU number at all. What we do manage for is actually a healthy ecosystem and ensuring that we can remove bugs -- sorry, remove bad actors from that ecosystem, whether it's illegal behavior or bots or spamming of people, et cetera.

It's another area where historically, we've done less work and we do more work on it now, partly because we can build way better tools to find bad actors today than we could 3 years ago because of Gen AI. Also, the same with tools that you use to find bad actors, bad actors can use to create more bad behavior. So you're playing whack-a-mole with them a little bit.

But overall, we are removing significantly more bad actors from the platform today than we were 12 months ago and 24 months ago. And it turns out that most bad actors show up in the new MAU that you might be getting at any given time. because they were always going to be removed at some point, but they were going to be in the product for longer previously versus what they're going to be in the product now.

And so if you look at our MAU growth in '25 versus '24, the only real difference is the account removals that we did, which we shared as a number. We removed about 350,000 unwanted MAU more last year than we did in 2024. And we -- had we had the tools that we had in '25, we would have removed those in '24 as well. And so the MAU growth would have been roughly the same as it was in '24. But we think the rough number of new aggregate adds that we saw in MAU last year is going to be what we'll see in the future as well, all through organically.

Now where we have potential for a lot more MAU growth is internationally, Latin America, in Asia and India in particular. And there, marketing can play a role because our brand awareness is not as high as it is in the U.S. Here, we have like a 90, 95-plus brand awareness. That's not the case in most of Latin America and Asia and even in some European countries. And so obviously, people know you, they use you, but if they don't know you, they can't use you. And so more people knowing us can be really valuable in driving more MAU growth.

Understood. Now one other area the markets had growing concerns over has really been a competitive intensity within the space. And so -- can you map out the competitive landscape in your view on where you think Grindr fits in? And do you believe competition has an increased impact in your business over the past year?

So this space, broadly speaking, whether you think of it as dating products or social media products is a very competitive -- and people use more than one product at once, and we know that. That's true for straight people. That's true for gay people, right? And there's many reasons why people do that.

So we are totally comfortable knowing full well that people are going to use more than one product. What we aim at is ensuring that we are the first in wallet product, if you kind of take the credit card analogy and that we're the product people come to for the longest amount of time, which has, I think, been the case for a long time and has continued to be the case regardless of what the competition may or may not do.

All the data that we have shows that that's the case. People spend more time in the app than they ever had. More people are coming to the app than they have ever come to the app before and young people are coming to the product pretty actively, and that's not an issue.

And whenever I say young, to be very clear, I refer to people 18-plus Grindr than 18-plus only product. So competition is out there that fully fine. We look a little bit at what they do. We try to stay ahead of competition, but that's not the main focus of our actions at all. What we are focused on is just really good activity for our users and ensuring that they're very happy in the product.

Okay. Great. Well, another area where you've been really early adopters has been Gen AI. I think you've been, especially within the consumer Internet space, one of the most proactive and not just internal operations but also launching products in the.

Tell me why I quickly jumped.

Which is great. And so can you talk to us about, one, what you think the most underappreciated Gen AI opportunity is? And two, what you think the most underappreciated challenge is among investors?

So for us, the way I thought about AI coming into Grindr is I actually had built an AI company in 2019, 2020 and then sold it in the automotive space. And I knew a lot more about AI think than most people did as a result. And AI is only as good as the data that is driving it, and Grindr has an incredible amount of data.

And so to me, coming into this job in 2022, that was a really exciting piece. I'm like, hey, there's like this gold mine of information. And by the way, you have users that are early adopters, right? Like they adopted the iPhone very, very early, and so you could make a conjecture that they would adopt AI early as well. And you could build a truly AI native experience for them the same way that you were building -- you built a mobile-first experience for them in 2009, 2010.

So to me, that was really, really exciting. And the things that I see as huge opportunities is solving some of the challenges that game people face in meeting other people because of density. So if you talk to game men, a very large number of them will tell you, actually, I want to be in a relationship, but it's really hard for me to meet somebody that matches what I'm looking -- and that's because most dating in the U.S. is done by geography for where you live.

And in most geographies, maybe say, other than New York and London, the density of people is very low for total number of people to choose from, right? Even in San Francisco, where we are right now, it's one of the gate cities in the world, if not the gate city in the world as far as percentage of total population.

But you're talking about somewhere between 30,000 and 60,000 potential partners if you look at every person in the city of San Francisco. That's not a lot of people to choose from if you are looking for a partner. And so what AI can help us do is allow people to meet other people outside of their geographies and reduce the barrier of, hey, I don't want to travel this far to meet this person because we can share so much more information about the other person with you and match you so much better.

And that's what we're doing with AI is taking all this rich data that we have in people's messages, and their activity and their behavior in the app and using that to create better matches between people. And that's ultimately what the Edge product is all about, right? It's taking all this unique data, putting it into product experiences and putting them all in one tier and saying, Hey, you can use this to either find your casual partners or find your long-term partners or find your friends, et cetera, or use it when you travel.

One of the most amazing things for me being in this job now is some of the data I've seen about how gay men thinking about long-term life has changed post-game marriage. So when I was young girl and not married, I knew I want to have a long-term partner, and I even more knew that I want to have children. And so in my 20s, when I would say, I want to be married and I have children, I was like this weird where like maybe like 1 in 10 guys would say they want to be married and 1 in 100 guys would say that they want to have kids.

We do a national survey every year, State of the Gay Nation, we call it, and we did it last year, we did it this year. Half of the gay men, 35 and under say they want to be married and 25% of the gay men, 35 and say I want to have children. That's a higher rate of I want to be married among gay men and among great women of the same age cohort. And so we have like a huge opportunity to service that cohort in ways that never has been done before through these AI products that I'm like super excited about.

Great. Now flipping over to the margin side. You've maintained strong EBITDA margins of 40% plus for many years now. As you think about all the different areas you want to expand in and invest in, how do you balance the margin trajectory with revenue growth? And then from an AI perspective, as you lean in here, do you see opportunities to really push the productivity that you could have internally?

Yes. So -- that's two different questions, and I'll answer both. When we gave our guidance in June '24, we said 39% to 42% EBITDA margin. We've stayed consistently above that in large part because we've been leaner than we thought we would be in terms of number of people working there because ultimately, our single biggest expense is people.

I think implied EBITDA guidance for this year was $41 million, which is kind of on the high end of that number for the year, if you look at the revenue and EBITDA that we gave, and it assumes that we're going to actually hire the people that we want to hire, but we tend to usually be behind on hiring because we keep a very high bar because that will not allow the company to get bloated.

We had 225 people when I joined. We went down to 90 at one point. Now we're at 16 in the U.S. and 30 in Colombia, but still below where we peaked, but the business is twice as big or more than twice as big now as it was back then. So in terms of revenue per head, it's much higher now. We're like $2.75 million in revenue per head. And so I think keeping -- and that's possible because we have a very high bar.

I mean, I think our team is about as good of a team as any tech company team in Silicon Valley today. And that's very important to me, and we'll continue to keep a bar that's very, very high in that sense. And so the opportunity in margin this year would be higher slower than we think we will. And as a result, margin comes in higher or revenue does better than we're guiding to.

And then obviously, we're not going to spend that money. That's going to drop down to margin as well. With regards to making the team even more efficient, I mean, we -- 0% of our code last January was written by AI. 70% of our code this January was written by AI. I don't think there's another legacy product company that can say that. And that happened because we made a decision that we're going to become AI native in how we code, and we did.

Now we're not at 100% AI-generated code. There are some teams at grinded that do that, but not every team. And we'll get to, I think, that number over the next couple of years. I think some of the refactoring that we need to do our code will help us do that because not all parts of our code actually can accept AI agents today. But what we're doing with our engineering organization is going to happen across every other organization.

For example, we need to stop thinking about engineers -- well, first, we need to stop thinking about Android engineer and iOS engineer, like those terms will disappear because you're going to be an engineer. And if AI is writing your code, it doesn't matter if you were an iOS expert and Android actually should be able to work across the stack. Then we're going to probably stop thinking about PMs, designers and engineers because they're all going to be doing similar stuff.

And that part, we have not yet actively started to do, like our PMs are not yet asked to check in code, but that's going to start happening and people are going to become more efficient. And then obviously, we want to do that across every other part of the organization, whether it's in finance or in marketing or in sales or legal, et cetera. I think we're far along in a lot of those, but not all of those and not as far along as we are in engineering

Well, we covered a lot of ground here. So maybe leave us with the one or two things you think investors most underappreciate or misunderstand about the story.

Well, I think people still think of Grindr as a dating product and use the dating companies as the comps, which I think is completely off. I think Grindr should be thought of as a social network and the social network company should be the comps to Grindr except that we are narrowly focused on this particular gay and by male user base cohort, which, by the way, is significantly wealthier and has significantly more disposable income than almost any other set of the population and is a trendsetter, which is really valuable. So that's number one.

And then number two is the fact that -- and the first one is hard for me to understand why that confusion is still there, but I keep hammering on that. The second one I actually do understand why people don't fully get this piece yet because we've not proven it yet is our users spend a lot of money with other products and services. And our hypothesis is, hey, we know them better than anybody else does. The products that they buy were not built for them. They were built for the general population that just happen to buy them.

We can actually replicate those products specifically for them better than somebody who is not targeting them. And can we bring them to start buying from us versus somebody else, using, by the way, a product to drive brand awareness and distribution that they use for over an hour day. And I think that's a very strong thesis. And if you think of Grindr that way, then it's a lot more than even a social network. It can -- has a potential to be like the primary super app for gay people. And I think that's the big thesis that people should be thinking about when they think about our business.

Okay. Well, George, it's been great. Thanks so much for being here. Thanks for having me. I appreciate it.

My name is Kate, and I will be your conference operator today. At this time, I would like to welcome you to the Grindr Fourth Quarter 2025 Earnings Call. [Operator Instructions] At this time, I would like to turn the call over to Tolu Adeofe, Director of Investor Relations.

Thank you, moderator. Hello, and welcome to the Grindr Earnings Call for the Fourth Quarter and Full Year 2025. Today's call will be led by Grindr's CEO, George Arison and CFO, John North. 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 in Grindr Investor page at investors.grindr.com.

Before we begin, I will remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate or similar such statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC.

During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures including a reconciliation of GAAP to non-GAAP measures are included in the earnings release we issued today, which has been posted on 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.

Good afternoon, everyone, and thank you for joining us today. 2025 was an exceptional year for Grindr. Revenue grew 28% year-over-year to $440 million and we delivered roughly $196 million of adjusted EBITDA, meaning we achieved more EBITDA than our revenue just 3 years ago. We accomplished that while materially improving the product and platform and while rapidly terra forming Grindr into an AI-native organization. In such a fantastic year, I'd point to 3 highlights. First, the core business stayed strong. We expanded the product in ways that deepen engagement and Clariteintent, including the global expansion of right now and launches like for you, chat summaries and A-List.

We strengthened Extra and unlimited and expanded monetization through ad formats like rewarded video. Second, we made real progress on AI, not as a feature, but as an operating advantage. In Q4, AI ages grow between 60% and 70% of our new code and our engineers are reporting roughly a 1.5x productivity improvement per person. We're now able to ship faster with higher quality without the company getting heavier and slower.

Third, we expect to drive revenue growth in a way that matches what we've built. Over the last several years, we've added a lot of new value to expand unlimited, significantly expanding what users get from both tiers to make sure we're capturing the right economics in return, in August, we'll begin rolling out new pricing for [indiscernible]. Results have been encouraging, and we are continuing to roll out these changes globally through the first half of 2026.

Looking ahead, our framing for 2026 is to raise the baseline. Our best execution periods during 2025 with high output, high urgency, high quality will become our default operating mode. And from that baseline, we intend to push even higher. Therefore, this year, we are constituting on 4 priorities: first, premium experiences encompassed and edge. This AI-native premium tier is built for power users who want the most capable version of Grindr and today's technology enables us to build. We'll continue refining the experience and testing price points for the year; second, durable core growth, that means improving onboarding translation and localization, offering personalization and intent clarity through AI, and beginning to strengthen the user experience in lower-density and international markets.

Third, operational rigor through grinder mode, so ownership, higher productivity, faster decision-making, greater leverage for our management layer and AI embedded into everyday workflows across countries. Fourth, deliberate investment for durability and upside, we are leaning into reinvestment in our team, our platform foundations and ecosystem health. That same posture applies beyond subscriptions, we will continue building Grindr Health anchored by Wood work, and we will keep strengthening our ads platform with increased focus on direct advertising and brand partnerships.

Up to this point, these remarks were read by AI, using a proprietary voice model trained on my voice by one of our Gayborhood expansion teams. We did that deliberately as a small demonstration of how deeply AI is becoming embedded in both our product and our operations. Our continued focus as a management team is to execute against a strategy that creates significant long-term shareholder value by building exceptional experiences for our users while driving sustained growth in revenue and profitability.

At both the management and the Board level, we are committed to demonstrating this through our actions and to continue doing all we can to earn our investors' long-term trust and support. Thank you to the Grindr team for delivering through another ambitious year and to our users for their continued willingness to come to Grindr for the [indiscernible]. With that, I'll turn it over to John to review the financials and guidance.

Thank you, George, and hello, everyone. I'll start by summing up the year and then dive into the fourth quarter. Grindr delivered outstanding results in 2025. Revenue grew 28% year-over-year to $440 million, and adjusted EBITDA was $196 million, representing a 44% margin. For the full year, we reported net income of $103 million compared with a loss in 2024 that reflected a noncash warrant liability revaluation.

In the fourth quarter, revenue was $126 million, up 29% year-over-year. Direct revenue was $103 million and indirect revenue was $23 million for the quarter. Revenue exceeded our increased full year guidance provided in November due to continued strength from our subscription and add-on offerings as well as strong performance in our TPA business, which benefited from strong demand from both our partners and growing international markets.

Adjusted EBITDA for the quarter was $56 million, a 44% margin and net income was $29 million. We demonstrated operating leverage in the fourth quarter. Operating expenses, excluding cost of revenue, were $63 million. As a percent of revenue, those expenses declined to 50% from 54% in the prior year, which supported operating income for the quarter of $31 million or 25% of revenue. For the full year, operating expenses, excluding cost of revenue, were $201 million declining 2% to 46% of revenue versus 48% in 2024.

Operating income for 2025 was $126 million or 29% of revenue. We finished the year in a strong liquidity position. Cash and cash equivalents were approximately $87 million at year-end and total gross debt was roughly $396 million. We generated $133 million in free cash flow in 2025 and which we utilized for both investment and growth initiatives and our share buyback program. Today, we announced a 3-year $400 million expansion of our share repurchase authorization and extended the program by 3 years to March 2029.

This step reinforces our conviction in the strategy and our optimism of what's ahead for Grindr. In 2025, we repurchased 25.1 million shares against the original $500 million authorization for approximately $450 million. The balance of approximately $50 million will roll into the [indiscernible] extended program announced today, giving us total repurchase availability of up to $450 million. When we launched the initial 2-year $500 million authorization a year ago, the key objective was to offset the dilution we expected from the cash exercise of Grindr post the leaseback warrants. We moved through most of that authorization quickly clearing the warrant overhang, eliminating nearly all of the associated dilution and doing so without increasing our aggregate debt.

This expanded authorization gives us flexibility to buy shares when appropriate and in doing so, return capital to shareholders. Going forward, we expect our pace to be materially more measured. And because the business continues to execute at a high level with strong cash generation and real durability, we can return substantial capital to shareholders and keep investing aggressively in the long-term road map that will compound growth and profitability over time.

Before I discuss our outlook, I'll briefly expand on user metrics and our updated MAU disclosure. Average MAU for 2025 was $15 million. Average paying users were approximately 1.26 million and ARPU was $24.25. As we discussed in November, we will be providing average MAU on an annual basis rather than quarterly going forward. This change better reflects the way we manage our business, focusing on delivering value and a great experience to our reliable funnel of freezers and enhancing the features we provide to our paying users and aligns our disclosures with many of our public consumer Internet peers.

We'll continue to provide quarterly visibility on leading engagement indicators. Finally, we have introduced our outlook for 2026. We expect to continue growing the business while scaling investments in longer-term initiatives, including premiumization, AI and the Gayborhood. For full year 2026, we expect revenue of greater than $528 million and adjusted EBITDA of greater than $217 million. As we have consistently discussed, we guide to what we have clear line of sight to. George noted that some of our early initiatives like Edge and Wood work are not yet included in our outlook as the pay revenue growth is not yet predictable, though the investments in expense are factored into our adjusted EBITDA for the year.

We will continue to invest carefully and with discipline and to protect our ability to generate strong cash flow. Additionally, while we do not provide guidance on a quarterly basis, we currently expect our revenue growth rate and adjusted EBITDA margin in Q1 to pace well ahead of our annual results reflecting earlier revenue momentum and the timing of our planned 2026 investments, respectively. As noted in the past, we do not manage our business for quarter-to-quarter performance, but for long-term durable and sustainable growth and profitability.

In closing, 2025 is a great year of strong growth, outstanding margins and durable free cash flow generation. In addition to our highly cash-generative business model, we have a healthy balance sheet that gives us the flexibility to invest and return capital.

And with that, operator, please open the line to questions.

[Operator Instructions] Your first question comes from Andrew Marok with Raymond James.

Thanks to AI, George, for the remarks. If we could start with 2026, I guess, what you've seen so far in terms of things like retention and churn impacts from your pricing actions that you've done to your base plans at this point and kind of some of the assumptions underpinning Edge into the '26 outlook? And then I have a follow-up.

Sure. I can start with that and then John chime in if he wants to add anything. So with regards to '26 and pricing changes, we were very happy with the results of the test that we ran in 2025, starting in about August on pricing. The user base accepted the price changes very well. I think that speaks to the fact that we have added an incredible amount of value to both AIXTRON limited over the last 3 to 4 years and a lot of new features and products were added to those tiers. But we never charged for those, right? So I think users like the features and the offering that is there. And so now having to pay a little bit more for all that extra value that has been generated over the last 3 years was not a significant challenge, and I think has been really well received.

So we don't expect to have any significant impact on conversion from the price changes that we made. And we will be rolling out the price changes throughout the first half of the year across the globe. It's live with a lot of users already, but not live at 100%, and that's something we expect to happen in H1. With regard to Edge, we started Edge in -- the products that are in Edge have been in testing for a while, but as a tier, it went live in Q4 of last year in Australia. The feedback on that was extremely positive. Frankly, was higher than we had anticipated in a pretty significant way, which told us that there's a lot of value in what we're creating. And potentially, we were not pricing it appropriately or the amount of value that we were generating.

To get a better sense of the price points, given that we've never done anything of that nature before. We've never offered a product of that much value in the past. We felt that it was important to do tests outside of Australia as well. And so we launched tests in certain U.S. and other global markets where we have a significant number of users who are paying customers. Those tests are ongoing today and that some of the information that got out into the public, which was inevitable when you start doing price test like this, it will trietension. We would expect testing to continue through H1 and probably in Q3 as well. Edge is being really built as the core foundation of growth in 2027. If we go global with Edge outside of testing in 2026, it will be upside. It's not assumed at all in our guidance for the year.

Great. really clear there. And then maybe in a different direction. Following the break of the proposed takeout offer a couple of months ago, you were left with 2 major shareholders, one of whom has been selling down a stake pretty significantly. I guess, can you give us any color as to your expectations for how the situation plays out and how you're approaching the governance situation in the meantime?

Thanks for the question. I appreciate where the question is coming from, and I understand that this is an important issue for a lot of shareholders. We, ourselves, get this question from folks pretty regularly. And also appreciate that in light of last fall, there is more interest in that. As I believe everybody knows, James has stepped down the Board and the Board does continue to view this issue as quite important. And that's something that I've always thought about. I think one of the things that came out from last fall is that everybody is an alignment that Grindr remaining a public company is the best thing to do.

And that's true for Ray as our largest shareholder. That's true for the remainder of the Board, and that's true for management as well. I think the other thing that came out last fall that was very positive is that Michael Guerin, our Lead Independent Director, was willing to step into that role when James stepped down. Michael is among the most successful entrepreneurs in the world here yet. And so to have him be in that role is extremely valuable to me. He's been a great mentor, and I've learned a ton from him in the 3.5 years we've been working together and very much looking forward to continuing to work with him in that role.

Since going public, Grindr has had an impendent Board and our Board is very committed to remaining independent and to continue to be stronger. That's not something new that got started just in the fall. It's been going on for a long time. We have been adding new directors. We added Chad Cohen as a Director in May. I think it was a very positive addition to us given his financial expertise and rose twice as the CFO of a public company. And we are in the process of interior in candidates for Board membership now with into over a dozen very serious and credible candidates so far with support from 2 different search firms, and we will continue that process for the next several weeks as we get ready for the shareholder meeting this summer, and I think there'll be an update on that at the shareholder meeting.

And then lastly, what I'd say is that I have a very positive relationship with Ray. Ray has been a very good shareholder to Grindr. What Ray, James and Michael did when they rescue this company from Chinese ownership was massive, and it really saved the product and saved it for the community, and I think that's really valuable. And in the 4 years that I've known Ray, we've had a very positive and strong working relationship. He is a very entrepreneurial investor and that he very much likes to think about the long term and is very optimistic about the future and what the company can do whether it's in -- as a business overall or within products that we're launching.

And it's pretty deep in knowing what we're doing and what the road map is, which I think is really positive. So we've had a very good working relationship. I've learned a lot from him as well. Obviously, he has expertise in areas that I don't know as much about like capital markets. And so I've very much enjoyed working with him. I think he's a very strong shareholder, and I believe he'll continue to be a very committed shareholder for the long term, who is dedicated to this business. And there was -- you could speak to that from the fact that last year, even though he owns so much of the company, he bought even more ownership in the business by putting in nearly $200 million into the company at the time.

So I think we are in a very strong position from the governance standpoint, and the Board will continue to be very focused on ensuring that we are run as an independent company, which is something that's very important to me and to the Board.

Your next question comes from Nathan Feather with Morgan Stanley.

Congrats on the results here. I guess, first in thinking about the at least 20% revenue growth guidance you gave, can you help us think through the primary contributors that are included within that, whether it's the price increase or are there kind of factors. And then second, really interesting to hear the positive receptivity to the Edge year. Can you just provide some more information on within that what are the early subscribers saying is the primary value they're getting. There's a lot of different features. So trying to help kind of contextualize what are the things that people are really circling is, these are things that are really improving my experience.

Nathan, good to hear from you, and really appreciate you picking up coverage earlier this week. So thank you for that. I'll take the guidance question, and then maybe I can turn it over to George for the second question. When we think about guidance, our philosophy has been pretty consistent from the beginning, which is what do we have line of sight to. And how do we think about the business over the long term. We're not going to take a quarterly approach to managing the business. We're going to be long term and thoughtful in how we talk about what our outlook is, and that's reflected in the guidance for '26. It's what we have line of sight to.

And I think the 20% revenue growth, to your point, is still a great growth rate. It's primarily focused off of the product enhancements that we've been making over the last 18 to 24 months. And then the fact that we haven't really taken a price increase in 2018, if you can believe it. And so as George mentioned earlier, we implemented those pricing changes just right at the end of last year, and those are going to continue to work their way through the first 2 quarters of this year. And that's our expectation in terms of where the majority of the revenue growth is going to come along with continued growth in our advertising business. It was up 37% last year and making sure that we also enhance the quality of that business, both through better advertising things like rewarded ads and then also through [indiscernible]. So those are the primary drivers as we think about it. To the extent there are expansion opportunities, Edge gets pulled forward, things of that nature, we don't have line of sight to that now. It's not included in the guidance. And if and when that happens, it would hopefully lead to upset.

And with regards to Edge -- thanks for the question, I'd be looking forward to seeing you on Monday at the conference. And Edge is something that I super excited about because honestly, I [indiscernible] up with it, thinking through like what the opportunity is, and the team has done a really awesome job at making it happen. And also it's awesome because it's built on technology that wasn't in existence 4 years ago. One of my theses about taking this role and coming to Grindr was AI would become a game changer in how technology is being built. And Grindr was very uniquely positioned to be able to be an AI-first company, an AI-first product because we have so much data.

I think AI is good theoretically, but if you don't have the data, it can't really do very much, and we do have a ton of data that we can utilize. So the things that we're trying to solve with Edge are twofold. One is that people end up having many, many conversations like Grindr, which don't go very far. partly because new conversations take over, right? So because we're an open architecture platform, people can talk to anybody and people have many, many conversations at once. power users, in particular, have even more conversations but an average is a sense 50 messages a day. So you have many people that you're talking to all the time. That's really magical, and that's where a lot of the excitement of Grindr comes from.

But one of the negatives of that is that some of the great conversations you might be having get kind of pushed down and lost in the inbox. And I think we've been kind of thinking about over the years is how do we avoid that from happening? How do we help the user have a better sense of -- these are the conversations that I'm having and I want to maintain them and maybe they go somewhere beyond just the conversation over the long term. That's especially for users with travel a lot, because you might be having competition in different places. And then you're in New York, you have a bunch of companies in New York, then those get lost when you go back to, say, Chicago and not having compensation in Chicago.

What we've built within Edge is a product called A-List which takes your entire chat history and builds on top of it a set of summaries of the [indiscernible] and the best conversations that you've had with people that the AI believes are your best matches. And then you can go to your A-list and see those conversations and brings together those conversations. It brings together the summary. It tells you what you told them, what that person told you and why that's interesting. What are the important information that you shared about each other, whether it's your name or other relevant information, et cetera. It brings together the Ava person's photos as well. So you can see all the photos that he has shared with you or anything that you shared with him.

And that feature is a [indiscernible] feature. The users really frankly love it. And I very much remember in my head, the day when we, as a team, described it for the first time about 2 years ago and to go have it go from like just a concept in a conversation to here it's live and is as awesome as it is, I think it's fantastic. So that's the first piece of what we're trying to solve. The second piece that we're trying to solve is discovery. Grindr does not have a lot of information about its users on its profile. That's, again, part of the magic of Grindr, privacy is very important to users. And so we don't require to say a lot about you.

But there is a limitation to that in that you don't actually oftentimes know is this the right person for me to be reaching out to or not. And what we are doing with Edge is for people who want to be a part of this, obviously, it's all by person's choice. We don't force people into our AI functionality only people choose to be part of the functionality. Is this true? And the user who is subscribing to Edge will be able to see Grindr derived information about the other user. So if I'm looking at somebody's profile, and I'm an Edge subscriber, I will know things about that user behavior patterns that are useful for me to know in deciding whether I should reach out to him or not.

And I think that's extremely valuable and people are really loving that experience. And tied to that is the second piece, which is discovery. In almost every location in the world, the number of game people in a given geography is actually quite limited because we're about, what, 5% of population, maybe 6%. And that's not that many people, when you take half of the populations mail and then 5% of that is Gay. Maybe New York that's an exception where you do have a critical density, but everywhere else density is lacking. And so through a feature we call Discover, we're able to identify and service people to you that are the right matches for you, meaning we believe you will like them based on everything we know about you and everything we know about them, but you otherwise might not find and that's less contained by geography where Grindr is very geography focused, like I'm here and he's migrate around me. by geography is broader in nature. And that allows people to find new people that they otherwise might not connect with. But because it is based on all this information that we possess, it's actually a very positive recommendation. And because it's transparent because of insights, there's actually a desire on the person's part to engage in a conversation and take a risk on a longer distance because there's so much alignment of interest.

So that's what Edge is doing. I think it's a really incredible set of products because it's truly AI-natifying Grindr for people. I've been using it since about September when it got put on my phone. And it's really an incredible user experience. It also is very magical because as a product guy, knowing we can do this, you now know that every other company is going to build products like this over time, meaning legacy products and the legacy product is going to become even better with AI as a result. And so kind of thinking through that is really cool.

One last thing I'd say is we are starting this out at the premium tier, obviously. But over time, elements of what we are building with Edge will be available to everybody because we want the entirety of brand experience to be AI-defined and to be really amazing. Their free user experience and 91.5% of our users or 90% of our users don't pay for Grindr at all. And we do want to keep a really robust experience for them, and that's something that we will continue to do in the future as well.

Your next question comes from Eric Sheridan with Goldman Sachs.

And maybe building on that last answer, George, the first part would be just how your philosophy might change over time with respect to striking the right balance in terms of tiering the products and the platform. So you're continuing to grow the user base and also continue to sort of evolve the user funnel will broadly describe on the platform. And then the second part of the question would be, what have you learned about marketing as a potential stimulant for either accelerating the path towards higher tiers or more monetization for the platform more broadly or just user acquisition or traffic more broadly?

Thanks, Eric. Let me start with the first one. So historically, Grindr has had a very, very strong free tier, very robust for tier. There are 2 things that make, I think, a particularly robust compared to most other products of our kind. One is unlimited messaging, the fact that you can message anybody and continue having those conversations in an unlimited way. It's not like we tell you can only see 10 messages at a time or 20 messages at a time. It's completely free and the result is people send 50 messages a day on average, and that's more messages than you see on WhatsApp a day, right? And messaging is just one portion of Grindr.

And the second part is Discovery, the fact that you see this group of people, and you can start a conversation with anybody. And as you move around the city, the grid changes because different people come close to you and you can see them. That robustness, we obviously want to maintain and we want to keep. What we've done since probably 2020, so both during my time here and before, is start to slowly introduce some payrolls across the experience, whether it's in filtering or in visibility or in other areas that drive more people to convert to become paying users.

And that has served us well. It has allowed us to put a lot more value into the extra nary unlimited tiers. And we are seeing the benefits of that now because people very much value those tiers and are willing to pay slightly more for them in light of all the extra value that we put into them over the last few years. We could continue doing that, and that's a path that a lot of our companies have taken as well and continue to monetize by putting in more and more paywalls along the way, which would end up pushing more and more people to become paying customers.

But as we discussed at Investor Day back in June of 2024, the alternative way of monetizing is to actually start offering more premium features which a smaller subset of people will really value and want to pay more, and that would then eliminate the need for you to put in payrolls that are new and force more people to become converted to paying customers. And we believe that for Grindr, given the magical nature of the free user experience and keeping it very robust, that latter way of doing things might be a better approach, and so what we're going to be focusing on in 2026 and 2027 is that AI driven premiumization where we will be offering new features and new products to a smaller subset of users, initially power users and then slightly broader that we believe will really serve them very well, and they will be willing to pay for.

That will be the driver of our revenue growth this year, next year and so forth. And then we'll be able to take some of that growth and be able to push it back to the free user to ensure that the free experience ends up being really awesome and actually starts to improve. And so one of the things that we're doing this year is actually unwinding some of the paywalls that have been put in place over the years. and reducing some of the ad triggers that have been put in place as well as I give back to the 3 user experience to make the experience even better than it is right now. And that's something that we believe we can continue to do as we premiumize the product.

I think if you look back at last year's data from November, you'll see that younger users, 18 to 29 have a much lower pay rate, but that's okay because they can use the free product very successfully. And then as they age, they become more likely to pay because they want those added features at the more older age level. With regards to marketing, I oftentimes say that Grindr became successful in spite of its marketing rather than because of it. We, frankly, were not really focused on marketing at all and not really paying attention to it. When I got here, I felt that marketing was a huge opportunity, and we need to really lean into it. even though we have amazing brand awareness, 95% brand awareness in the United States, but that doesn't mean that everyone loves us. And marketing is both should be partly to have the product be loved.

And what we are really doing with our marketing efforts is creating an experience that -- or creating experiences in real world. and digitally that will get people to appreciate us as a business and as a product and love us more. And so what you saw last year a lot with things like the Gashit campaign or the Cristina Aclara campaign are these really cultural shaping magical moments that's to the power that Grindr has on society in terms of cultural impact. We have an audience that is very much a trend setter. And when they start doing something, a lot of other people follow, and we very much like to lean into that with our marketing efforts.

And I think the marketing change that we've seen through our new brand approach has been really fantastic and the users really love it. And we just got a little bit of data from a survey we did where like love for Grindr actually has increased in a significant way over the last 2 years, and we're very happy about that among gaming, the kind of the core audience. We do believe there's a lot of opportunity with brand building internationally because our brand is not as known in many countries as in the United States. And so that is an area that we have not historically leaned into, but we will be spending more of an effort on.

You saw this a little bit last year with us launching our social media channels in Spanish. We now have an agency supporting our communications work in Latin America, where we are doing a lot more palms work than we had done in the past. and we'll be leading to that. And so we are starting to take a little bit more of a global footprint on marketing. And I do believe that over time, though, that's not going to be immediate. We will see positive results in terms of user growth from more and more people knowing that we exist and then using this, right?

Because what we do know is that when people know us about us in certain countries like Brazil or Philippines or India, they use us and they really like us. but a lot of people still don't know us and they can't use us if they don't know us, right?

Your next question comes from Andrew Boone with Citizens.

I wanted to ask about Wood work. Can you guys just help us understand how that fits into the monetization playbook for 2026 and then out years? And then understood you're moving away from the mal metric, but we've seen 2 quarters of slowing growth. Is there anything that we should be thinking about or you want to highlight as we think about MAU growth on a go-forward basis as you do move to the annual disclosure?

Totally. So let me start with wood work. question. Woodwork is not at all in our guidance for 2026 from the revenue perspective, it is in there from the cost perspective, but costs on it are fairly modest. There's a small team that is working on that. But because we mostly partner with third parties for how it operates. There is not a lot to kind of cover in terms of costs other than the team. What I've said about Woodwork is everyone should think of it as a start-up inside Grindr. And it's a 10-month old start-up. We launched it in the spring of last year. In that time period, it has served thousands of users and thousands of patients has launched more than 1 product. So it started out with ED.

Now it offers more than ED medications, and we believe there's opportunity to offer several other treatments over time as well, such as hair care, which we don't yet offer and to really go through a test and learn process of like how do you go from 0 to 1. Well, now it's gone to 1 because it's able to go after more scaling, but it still is a startup. And I joked, I think, at the Board meeting if it were a stand-alone company, and was in Silicon Valley to be one of the hottest companies come out and given how much scale it's achieved in a very short amount of time with a minimal spend.

But it is still a start-up. And so we don't want to put the pressure of a public company on that team. We want them to operate like a startup, with deep start-up rigor as well as hard cores that start-up companies are run with. And so that's kind of how we're envisioning with work. But we do believe that over time, Woodwork can be a very valuable growth lever for us as well as an anchor for the broader health offering that we are working on and developing. And concurrently with that, it also makes the overall offering from Grindr better, right, because there's a lot of synergy between I subscribe to Grindr and I subscribe to, say, ED medications from with work, and we are seeing a lot of positive synergy when we are offering those 2 things together.

So that's kind of, I think, what I'll say about Woodwork. We're going to continue to maintain the view that giving information about that beyond that, probably is not in the best interest of that product being successful. With regards to MAU, to start with the quarterly MAU not how we think about our business. That is just not generally what means day-to-day management and how we operate. MAU has grown very nicely for a long time at Grindr, purely throw out of mouth. Last year, unadjusted MAU growth was 5.2%. I think I've said this before, and I'll explain again for those who haven't heard me, we did start to much more aggressively remove unwanted accounts from Grindr than we had done in the past in 2025.

And the result was that we removed about 350,000 more accounts out of MAU in 2025 than we would have done in 2024, had we not put in place all the new tools that we developed and implemented in 2025 for unwanted account removal. And so at the request from analysts and investors, we also did share an adjusted MAU growth number, meaning what would MAU growth have been like had we not removed these unwanted accounts. and that was 6.1%. So quite similar to what MAU growth would have been in the past years.

The only difference really is the fact that we did have this pretty significant adjustment from the more aggressive MAU removal. I do believe that we're going to continue to remove unwanted accounts quite aggressively. And so I think the amount of raw MAU growth that we saw in 2025 is how we should think about MAU growth for 2026 as well. And we do believe that there's a ton of opportunity for MAU growth beyond what we already do, especially internationally, with all the users -- all the potential users who don't know about Grindr, but could as well as the fact that they are very positive things happening in certain countries as far as acceptance in India, for example.

And so over time, you will have more and more being willing to use Grindr. And so we are thinking about what types of that we want to be doing internationally. That has been an area that we see as a big opportunity, but it's not one that we've gone after so far. purely out of focus. You can only focus on so many things, and that's not been one that we've been focused on yet, but it will become a bigger part of our focus in '26 and '27. And then the other piece that I think is an opportunity with now is older cohort retention and reengagement. As you saw from the data we released in November, we have a very strong younger user base, 18 to 29, but we become a little bit weaker at the kind of 45-plus cohort. And we believe that getting those users to reengage with us is an opportunity, especially in countries like the U.S. and the U.K., and that is also something that we are working on as well.

But both of those things are going to take a long time to have an impact. And so I wouldn't kind of look to, hey, in 1 quarter, that's going to have an impact.

Your next question comes from Logan Whalley with TD Cohen.

Yes, Logan on for John Blackledge here. Two questions. I guess, first, as you improve app functionality and then undertake big projects like you mentioned rewriting the code base. How do you weigh investment behind engineer head count versus, say, investment behind AI tooling to make your current engineers more productive? And then secondly, as part of your '26 guidance, you called out -- and the later you called out unwinding paywall dynamics and add triggers, could you talk about that in a little more detail, like what exactly that looks like for app users?

Sure. Yes. Thank you for that question. The first one is one of my favorite questions. And I think every Grindr employee would certify that George has been pushing him on this point for a lot longer than almost every of our executive in tech. I said at a conference in the fall of 2024 that there will be a time that when there are synthetic employees working alongside humans, inside companies. and I got a lot of flock for that. But I think no one denies that that's going to happen anymore. Synthetic AI agents or employees are going to be a fundamental part of our work on a go-forward basis. And we are seeing the impact of that now. At Grindr, we have been at the very, very forefront of adoption of AI in our day-to-day work. especially in engineering.

And I'm pretty confident in saying that we're probably in the top 5% of companies in tech in terms of how quickly we're adapting to that and how quickly we're teraforming to being an AI-native organization inside the company. The result of that is that in Q4, somewhere between 60% and 70% of the code that Grindr engineers produced was written by AI rather than by human beings. That number is higher in January and it's going to continue to be higher for the long time. And I believe that there's going to be a time when almost all the code that we produce will be written by AI agents.

That does not mean that engineers don't matter. Engineers actually matter even more now. And awesome engineers matter even more because the really great engineer is able to take advantage of these tools even more than anybody else's, making themselves even more valuable because they can do so much more, right? The concept of a 10x engineer is now becoming a 100x engineer because one 10x engineer can do 4, 5, 6, 7 10x engineers worth of work as a result of what the coding agents and AI-based synthetics are able to do for him or her when they are writing code.

And the way code is being written completely changes, right? I have some engineers who will write me know things like before I would come in and I would have a new project, and I would think about how I'm going to assign work for it. I want to give this much to this person and this to this person and would take each of these 2 individuals, 6 weeks to write the code that they were going to be working on for that particular project, and I would spend a lot of time helping them be more successful plus writing my own code and then bringing it all together.

Now I sit down with an AI agent, I started talking to it about what it is that I'm working on. I send it off to have them do the work. And within 2 days, that whole thing is done, right? So the speed by which we're going to be producing code is increasing rapidly. Internally, we've seen about a 1.5x increase in productivity per engineer that's self-reported data. So kind of it's pretty awesome. And we're going to continue to lean into that at Grindr, not just inside engineering, but everywhere else.

That does not mean we don't need more people. We are very -- our operational leverage is really high, $2.75 million in revenue per head, which I think is awesome. We only have 160 U.S.-based employees. Our EBITDA per employee is also very high. And we're going to continue to be best-in-class in that, but we do need more people, and we do want to continue scaling our team while maintaining extremely high talent bar. And so that's very much one of the big focus areas for us for this year, as I spoke about in our shareholder letter kind of pushing that Grindr mode that we'll be talking a lot about both internally and publicly as the year progresses.

As far as the unwinding is concerned, one of the things that historically has been true for us is that when we do launch a paywall or we do ad, they're global, right? We do them everywhere, all the same. And one of the things that we are learning is that maybe that's not ideal, certain ad triggers might not matter in some parts of the country or some parts of the world, but really do matter to users in other places. Certain paywalls might not matter to people in certain parts of the world, but really do matter to them in other places based on geography, based on density, based on the type of users where we have in those locations.

And so some of the unwinding that we're going to be doing on ad triggers and on payrolls will actually be geographic in nature as well as use of focus in nature, meaning understanding the user, what type of category of a user does that person fall into and whether those triggers should be in place for them or not. And we believe that it will end up having a better user experience as well as better long-term retention of users based on that section.

There are no more questions at this time. I'd now like to turn the call over to George for closing remarks.

Well, thank you, everybody, for joining. Hopefully, this video version of it all was worth it and helpful for folks, and we'll aim to do that again in May. Looking forward to seeing you then.

Ladies and gentlemen, thank you for standing by, and welcome to Grindr's Third Quarter 2025 Earnings Call. My name is Janine, and I will be your lead operator for today. [Operator Instructions] I would now like to turn the call over to Tolu Adeofe, Grindr's Head of Investor Relations. Please go ahead.

Thank you, moderator. Hello, and welcome to the Grindr Earnings Call for the Third Quarter 2025. Today's call will be led by Grindr's CEO, George Arison; and CFO, John North. 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. 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. 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, or any subsequently filed quarterly reports.

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 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.

Thanks, Tolu, and hello, everyone. The Grindr team delivered another awesome quarter with revenue up 30% year-over-year and adjusted EBITDA margin of 47%. The results put us in a great position as we finish the year. Today, we are increasing our expectation for full year 2025 adjusted EBITDA to a range of between $191 million and $193 million, implying a margin of greater than 43%, and we are reaffirming our revenue growth outlook of 26% or greater.

Our new CFO, John North, will walk you through the results in a moment. We're thrilled to have him join Grindr. He's led high-performing finance teams at Fortune 500 and S&P 500 companies and served as a public company CEO. He's already become an invaluable partner to [indiscernible] as we execute on our long-term vision.

Over the past 3 years, we focused on expanding Grindr's product service area, delivering more capabilities and high-quality experiences for free and paid users alike.

On Page 4 in my shareholder letter, you will see a chart showing that our product expansion has been tremendous, creating enormous value for users and driving higher conversion, more revenue capture and an increased revenue per pair. Grindr now offers a richer, more effective experience powered by strong technology and a broader feature set. Users endure products like Albums, Boost, Travel Boost, Viewed Me and Right Now. Through Gen AI, we are giving users access to powerful features like chat summary, discovery and profile recommendations.

All in, we've made the Grindr app more magical, dynamic and rewarding than it was just a few years ago, and we're only getting started. Expanding both our product surface area and the value we've created for paying users has put us in a strong position to test subscription price changes for the first time since 2018. We asked new subscribers in a large set of test markets to pay slightly more and experienced a de minimis impact on our paying user base with retention exceeding even our most optimistic projections. We're deeply grateful for our paying users' vote of confidence in our direction, demonstrated by their willingness to invest more for the new value and capabilities we've built. Over the next few months, we'll continue gathering data and prepare for a global rollout early next year.

Concurrently, in one country, we've begun offer testing a new AI-powered premium tier designed for power users for one of the most advanced and magical experiences. Think of it as a flagship first-class cabin of Grindr with features that simply weren't possible 2 or 3 years ago before Gen AI. This tier targets a smaller segment interested in higher-value products, offering distinctive user benefits and a meaningful revenue opportunity beginning in late 2026 and accelerating in 2027. Our rich, free experience remains central to Grindr's power, fueling the unmatched scale and vitality of our network. Capturing revenue through exceptional value-added features enable us to continue bolstering an already rich, free experience and to maintain the open conversational architecture that makes Grindr unique among any gay or straight platform that will always remain our top priority.

A defining strength of Grindr is its ability to renew itself with new users. Every year, Gay and bi men all over the world join as they become adults. Grindr is often the first place they learn about the engage, explore gay culture and find all types of connections from casual dates and hookups to love, to workout mates to friendships. This generational influx keeps the platform vibrant, relevant and ever growing with younger cohorts driving engagement across the network and older ones driving monetization.

To help illustrate this characteristic, which is very unique to our platform, we've included a onetime demographic disclosure with our shareholder letter. It highlights why Grindr's strong, consistent engagement, especially among users aged 18 to 29, who make up a majority of our global user base, positions us for durable long-term growth. We recognize that many of our investors are Grindr users and hope these insights make our user dynamics and community more tangible to you.

Overall, the products and business are performing exceptionally well, and the team remains laser-focused on delivering more value and more success to our users every day.

Before I wrap up, I'm sure everyone has seen the filings from 2 of our large shareholders, Ray Zage and James Lu proposing to take Grindr private. The Board has formed a special committee of independent disinterested directors to evaluate the proposal. The committee is working with its own independent financial and legal advisers. From the company standpoint, that process will run its course. Our team remains unwavering focused on execution. We are fortunate to work every day on things we love that bring happiness to millions of people and make a world that is more free, equal and just. Grindr has enormous potential to create value while continuing to deliver a product of deep importance to its users, and our job is to keep driving towards that. That's all we'll say on this matter at this time, and we won't be taking any questions about it on today's call.

Thank you to the Grindr team for delivering outstanding results we are reporting today. We're proud of what we've achieved, excited for a strong finish to the year, setting the stage for another standout year in 2026.

Now here's John to cover the results.

Thank you, George, and it's great to be here with all of you. I look forward to meeting many of you in the near future. I'm excited to be a part of Grindr and what the incredibly talented team is building. I've known and respected George for a long time, and the Grindr business model is among the most powerful I've ever seen. I see my role as further strengthening the finance organization, expanding our capital markets relationships and ensuring the company scales efficiently and profitably as we deliver on our vision.

As George highlighted, we had a phenomenal Q3. Total revenue was up 30% year-over-year to $116 million. Adjusted EBITDA of $55 million was up 37% year-over-year, resulting in 2 points of margin improvement to 47%, a record for Grindr. Our direct revenue grew 25% year-over-year, while indirect revenue was up 56%. Our ads business was the primary driver of outperformance in the quarter as we saw strong results from international third-party advertising partners. In the core app, revenue growth was driven by our strength in our unlimited tier, which this year saw the introduction of additional duration options and feature updates alongside the ongoing success of our weeklies product across subscription tiers. Our user KPIs were strong with an average of 1.3 million paying users in the quarter for an improved penetration rate of 8.6%.

Average MAU totaled $15.1 million and ARPU was $24.70. Our adjusted EBITDA margin performance reflected the strong flow-through of our revenue outperformance to the bottom line as well as higher capitalized product development costs. Operating expenses, excluding cost of revenue, were up 9% year-over-year, largely related to people costs as we execute on our innovation road map, including our AI initiatives. Grindr's net income for Q3 was $31 million or $0.16 per diluted share compared with $25 million or $0.09 per share a year ago. We generated approximately $51 million in free cash flow in the third quarter. Year-to-date, we've repurchased 25.1 million shares of our common stock for approximately $450 million, leaving us with $50 million remaining under our current authorization as of September 30. Our Board regularly reviews capital allocation plans, including options for returning excess cash.

Turning now to our guidance. Our strong Q3 results give us increased confidence in our 2025 outlook. And as George mentioned, we now expect our full year 2025 adjusted EBITDA will be between $191 million and $193 million, implying a margin greater than 43%, and we are reaffirming our revenue growth outlook of 26% or greater. As I noted in the P&L review, our 30% total revenue growth in Q3 was largely driven by outperformance in our ads business, which we do not expect to repeat in Q4. Recall that in our 2024 fourth quarter, we benefited from a large onetime brand campaign.

In conclusion, Q3 was a very strong quarter that reinforces Grindr's powerful business model. We're in a great position to deliver on our annual guidance, which we increased earlier this year and are revising upward today. And with that, we'll open the call up for some questions.

[Operator Instructions] Our first question comes from the line of Andrew Marok from Raymond James.

I wanted to talk quickly on pricing first. So I think you've mentioned in the past and your payer conversion rate kind of points to this that given that Grindr had a little bit farther to go in terms of product breadth that getting users to pay at all was one of the biggest milestones that you would make as a user. So I guess in light of that, how do you balance that philosophy of raising prices versus getting people to pay at all? Like is the increased price a potential higher barrier to make that first purchase?

Andrew, good to talk to you. We are obviously excited for users to pay if they've not paid before, but we also believe it's important for users who are getting a lot more product in the paid tiers and a lot more value to pay a little bit more for that value. And the price changes are, I think, fairly minor in the large scheme of things, given the amount of value that we've added to the product. We have seen significant growth in our number of paying users. The change over the last 3 years has been pretty significant. As you know, I think we went from something like 6.5% to 8.5%. And that, I think, speaks for a lot, especially given that MAU has also grown dramatically in that time period.

And secondly, we want to maintain a very robust free offering. I think one of the things you'll see in the shareholder letter in the disclosure that younger users who constitute a vast majority of our user base worldwide and nearly a majority of our user base in the United States and the U.K. tend to pay at a much lower rate than slightly older users. So on Page 8 of the letter, you'll see that 18- to 22-year-olds have the lowest penetration and then that kind of increases dramatically as they go to 30, 39 or 40, 40, 49, et cetera. And so we kind of have a 2-parted strategy, right? On the one hand, we want as many young users coming into the product and having a really awesome experience through a very robust free offering where they can use all the features that we offer, including being able to talk to anybody for free with no limits. We're the only product of our kind that has that, whether gay or straight.

And then from there, we want people to be able to pay for the value-added services that we offer them. And what we are learning is that people who -- as they age and get older, they end up getting more value from the features that we offer in paid tiers, and they're willing to pay for those. What we've seen in our price testing as prices have changed is that we have had very little to de minimis change in our conversion rates when you compare new prices versus old, which is really great and it speaks to the fact that people value the products they're getting in those paid tiers.

And then a couple of more things on that. Number one is we do monetize our free users through ads. Obviously, we had a significant increase in our ad revenue over the last 3 years as well, and we continue to do very well there. And I think that's an important component of that equation as well. We have thought about whether we should offer a cheaper tier as well for users who might want to not have ads at all, but are not quite ready to pay for XTRA because they don't need the value that XTRA includes in terms of features and products. And that's something we're still thinking about. I don't want to promise either way that we'll do that, but that's certainly a possibility as a way to get more people to potentially be payers. But if you do that, you actually won't have that big of a revenue impact because the price point on that would be fairly low.

And then lastly, I think the important thing for us is by creating a lot more product value, we are now asking people to pay a little bit more for that. This isn't just a price raise for the sake of a price raise or because we want to make more money. It's to ensure that users who are enjoying a lot more value in the experiences because the XTRA and the Unlimited tiers are way more robust today than they were 3 years ago as a result of a lot more product area that we've created in those tiers are actually paying for the value they're getting from those tiers.

Got it. Really appreciate that. And then maybe if you could just give us a quick update on how some of the newer products, especially thinking of something like Right Now is trending in terms of things like engagement metrics and to the extent that you can measure them, things like user satisfaction or outcomes.

I don't really have much new to say on that beyond what we've said before, which I'll be happy to repeat. I think the way we tend to think of our products is launch a lot of product surface area. Some will be free, some will be paid. We want to have a robust free offering and some things that are more special might be offered to paying users only. With Right Now, our objective was to dramatically increase the surface of a free product. So everybody who is on Grindr, whether paid or free can utilize Right Now and enjoy it. Somewhere between 20% and 25% of our users post in Right Now, at least once a week. And over 75% of our users look at Right Now postings within -- once people are in Right Now, which I think shows really high engagement, and we are very happy about that. But obviously, there is a lot more that you can do with Right Now.

I was in New York a couple of weeks ago, where we have the mapping feature in Right Now on as well. I'll be totally honest. I was not sold on the idea of mapping in Right Now when the team first went after it. But when you're in New York and are seeing the product kind of in your hands, it's a really incredible magical experience and looks really, really nice. And I think people really like that. And so we're really happy with where the product is trending. And normally, we don't really share a lot of product metrics, but I do want to call out, again, in the shareholder letter, we did share a very extensive disclosure on our user base and kind of how that is split out.

The fact that we have -- in the U.S., for example, 15% of our users are ages 18 to 22, 31% of our users are ages 23 to 29 that 46% of all Grindr profiles are kind of in that age range of 18 to 29. And that to me is something that kind of speaks to the uniqueness of Grindr as a business and a product and the fact that users -- the younger generation really likes what they're getting in the product, and it's very much working for them. So as long as our products are accomplishing the idea of bringing young people into the product as they become adults as a right of passage like it has for the last 15 years, I think we're in a very strong position.

Our next question comes from the line of John Blackledge from TD Cowen.

It's Logan Whalley on for John. So just looking at top of funnel, MAUs grew nicely again in 3Q. Could you discuss any trends which drove the top of funnel users higher in the quarter? And then also in 2Q, you called out some significant removal of bad actors in a certain region. Could you just update us on any similar efforts globally in 3Q and then looking forward just based on health of the platform?

Thanks for the questions. So first, let's start with what it is that we actually report. We report monthly active devices, not users and not profiles. A lot of Grindr users have more than 1 profile, and those are pretty hard to debug in terms of are they 1 individual or 2. That happens for many different reasons. Some people might have a profile that is more friendship focused and then they might have a profile that is more casual dating focused, and they have different information on those profiles, and we definitely don't discourage that and are happy with users having more than 1 profile. So the best way for us to debug what we report is monthly active device, not user. And I think it's really important for people to understand, especially when I try to compare it to external data, which, as we have spoken before, tends to be perpetually wrong about Grindr information. I think in part because people don't pay attention to what it is that Grindr actually reports.

Secondly, our ecosystem is really -- the health of the ecosystem is really important to us. And so as we see bad actors come into the ecosystem, whether those are stammers or other types of bad actors, we take actions to remove them. Over the last 2 to 3 years, I think all social networking companies would validate this. Scammers have become more sophisticated with Gen AI, and that means that you have to become more sophisticated in fighting them. And as we do that, it can impact MAU. In Q2, in the first half of the year, there were a significant impact on MAU, and we've spoken about that. It doesn't always impact MAU when we go after bad actors because some bad actors have profiles that don't have a device ID associated with them. They do that by spoofing Android devices. That's a known kind of flaw with the Android ecosystem that you can do. And so when we remove actors that are bad, that don't have a monthly active device, they don't get associated with MAU one way or the other because they were never in our MAU in any way. But when we remove bad actors that do have devices, they do.

Thirdly, we have never really done much to drive MAU growth. Our MAU grows almost completely organically through word of mouth. As I said earlier, Grindr is a rider passage for people as they turn 18. And if they are gay, they come to Grindr as a way to figure out who they are, what it's like to be to start meeting people for any number of types of connections. And so organically, our MAU tends to grow really nicely. We are very happy with our MAU growth. And frankly, the numbers that you're seeing in terms of growth are very much in line with our long-term guidance assumptions that we shared at Investor Day 1.5 years ago.

And then lastly, I'll call out again the disclosure towards of our user demographics. You couldn't have the demographics that we have in our profile set that we share on Page 7 and 8 unless you're attracting a lot of new users. It would be impossible to have 50% of the user base be 18 to 22 in the United States when only 9% of the U.S. adult male population is in that age cohort unless you're constantly attracting people who are young and attracting them at very high rates.

And that's even more true internationally in places like India and Philippines, et cetera, where older users are still stigmatized and might not so comfortable being a [indiscernible] while younger users are coming out and more comfortable. So in those places, our user base is even more heavily young. And a lot of our focus is ensuring that we continue doing that through the right product initiatives so that we serve this younger adult male cohort as well as we possibly can.

Great. Maybe one other question just on the premium tier. You mentioned that would be designed for power users. Like could you give us any kind of an idea of what how many power users are on the Grindr platform? Like what percentage of overall users might kind of fall into the bucket that you're designing the subscription for?

Yes. So the premium tier was a significant component of what we envisioned in terms of the long-term strategy that we shared at Investor Day because we knew that a lot of our investments would be around AI features, which are really magical and previously were not possible to build. We are building those and making them available. And we just think that the amount of value that we will be generating through those features and products for people, we will see -- I think people need to be prepared to pay for the value they'll be getting from that.

That tier is meant for our power users and for a very select set of people. We don't expect a huge number of people going into that, but it will be priced appropriately for that. We have something like, I think, 350,000 Unlimited subscribers. So if you imagine that 20% of those subscribers switched over to Unlimited, I think you'd have -- sorry, to the premium tier, you'd have a very nice kind of growth in our revenue because it's a significant dollar amount at the price points that we are thinking about. And I would call that like a good home run.

If 30% or 40% or 50% of our Unlimited users switch to the premium tier, then you'd have like a grand slam because it'd be like an incredible result. I don't know which one of those is going to happen. That's why we need a few quarters of testing and learning to understand what happens. But I do know that the kinds of features that we offer in this new premium tier are pretty magical. And I think a lot of people will be very happy with them. But at no point have we thought about as something that a very large percentage of our overall user base will utilize. This is very much meant for our power users who can benefit from the unique features that will be put into that tier or that have already been put in that tier.

And quite frankly, I think 1 of -- maybe 5 people in the United States who is in the beta because the beta is starting somewhere else. And when you use Grindr with these features, it is a very, very different experience. We were entering a fairly senior product candidate about 2 weeks ago and kind of walked them through what it's like on the app and he's like, wow, that's really, really special. And I really very much hope that everybody else feels the same way as this tier kind of expand more broadly to be available to more people. But I would not expect to have a global rollout until at the earliest sometime in H2 of next year.

Yes. And maybe, George, if I can just jump in and add on to that. The one thing I want to triangulate back to is that we are looking at continued investment in these enhancements that are going to bring new and exciting features and differentiation as we move forward. And that's been contemplated in the 3-year plan that we put out in the summer of 2024. We're going to finish the year at better than a 43% EBITDA margin, but I want to make sure we remind everyone that in that plan, we anticipated many of these investments. And so we still think triangulating to the EBITDA margin range we gave at the time of 39% to 42% as you think about years '26 and 2027 is an important point to keep in mind and that you can't just roll forward what we may finish this year at as you think about next year and beyond.

Our question will come from the line of Andrew Boone from Citizens Bank.

Three for me, if I could. I would love to get an update in terms of international. Just how did that trend in the quarter? And then any new initiatives you guys may have in terms of localization or anything else we should think about there? gAI, George, can you just talk about the bigger opportunity with that product in the quarter? And kind of what's your vision in terms of bringing more AI tools in terms of incorporating AI into the Gayborhood? And then lastly, just on advertising. Can you guys just help us understand, it sounds like it was very strong in the quarter. What was the driver of that growth? Is there anything to call out? And then how do we think about that going forward?

Great. Thank you for all that. I wrote it down, but hopefully, I don't forget, if I do, please remind me, I'm not ignoring any of the questions. They're all fun things to talk about. So on international, what we said at Investor Day is that international is a very large opportunity for Grindr. And I'll walk you through kind of how we think about that. But first to kind of preface, I think one of the main jobs of the CEO is twofold, right? Number one is to paraphrase another very prominent CFO, CEO whom I really admire is to amp things up, meaning to put pressure for things to happen as fast as possible and as many things to get done as possible. And I think everyone who knows me knows that I'm costly amping it up on the team.

But concurrently with that, another really critical place is to prioritize things properly. If you try to do everything, you'll get nothing done well and finding the right prioritization on things is really important. There was a lot to do at Grindr when we got started 3 years ago, and we've been prioritizing things based on what we thought was most critical. And in total fairness, I think going after our international opportunity was not as top of a priority as some other things have been so far because those were more important even for the user base or from a perspective of what we wanted to achieve over the long term, which still means that international is a huge opportunity and is something that should be viewed as upside when you think about it from the long-term modeling perspective rather than something that we assumed would be the case in our 3-year plan that we shared June 2024.

The way we think of international is in 3 buckets. So first, in countries where we already have a pretty significant presence and those countries are economically advanced, we believe that there is opportunity to continue driving more users to become paying customers and to pay for the extra value they're seeing from the added new features that we're building. So we -- our payer penetration in Europe, for example, is lower than our payer penetration is in the United States. And we'd love to do things that would help us drive payer penetration to be more akin to the U.S. in Mainland Europe, which we think is possible. Obviously, U.S. will continue to grow as well. I'm not saying U.S. is going to just stop growing. But if we could get them closer to U.S. levels of payer penetration or even the U.K.'s levels of payer penetration, that would be a really big win. So that is one bucket of focus for international is Europe and countries like Europe in terms of their economic development, get them to have more payers.

Number two is countries where we have very large sets of users and do okay on payers, but we believe that there is still opportunity for people to learn that we exist and to use us, have a ton of user growth opportunity. Places like that are Brazil, Philippines, rest of Latin America, Mexico, Colombia, Chile, et cetera. And Asian countries like Thailand, Vietnam, potentially Cambodia. In many of these places, we know from research that a very large number of people in our user cohort know that we exist and those that know about us, use us. But then there are a bunch of others that don't know about us and because our brand recognition is not as high in those countries as it is in the United States or the U.K. And so as they learn about us, we believe there will be opportunity for them to start using us, which we think will be very valuable.

And then the third bucket is India, which should be called out separately because of its size. 10 years ago, it was illegal to be gay in India. So obviously, there's a ton of social stigma attached with being gay. It is changing for young users, as you can see from the data that we shared. But we want to be present there as the social transition changes, or happens and as more and more people become comfortable with who they are, and kind of continue to be the primary product for gay people in India like we already are as many more of them become comfortable using our product.

And so that's the kind of opportunity. A lot of what we need to do internationally is around localization of the product. That might be simple things like how we show up in a specific language in a given country. We don't use a lot of slang in how we describe ourselves in a lot of these places in our translations, and we probably should and kind of what -- how people communicate in those languages to what kind of imagery we show you in each of these countries. And then on a more advanced level, what kind of products do we build?

If you go to New Delhi, for example, and you open up Grindr, the grid will look very, very different from what the grid looks like in New York. Everywhere, there are a lot of people who are discrete and who might not show their face. or might not have a picture at all. But in India, vast majority of people don't show their face in a picture at all because it's still really hard to be gay. And so maybe in a place like India, the grid should actually look a little bit different. Maybe we should allow people to have AI-generated photos that they can post. I'm not saying that's what we would do, but like you can imagine through product solving the problem of discreetness in India differently than you deal with it in other places because they have unique needs in that country.

And those are all things that we can do to help grow our presence. And obviously, through marketing, we can do a lot as well. We've spoken the shareholder about the fact that we have now launched our Spanish-speaking social media channels. We've also launched our first social show in Spanish. And those are the kinds of things we'll be doing in other languages as well, such as Portuguese and for specific countries like India as well. So that's on international.

When it comes to gAI, we believe that AI, and I detailed this quite a bit in the document we shared last quarter about AI incumbent companies with a lot of data can benefit significantly if they start taking advantage of AI early before potential challenges are able to catch up with data because AI is better with data. And if you are kind of at the forefront, you can make your product be very, very different from a technology point of view with AI. And we do want our product to be turned into an AI-native product. And that's very much what we've been striving to do by retraining models to be able to speak gay, and I think we're doing a pretty good job at that. And then being able to use those models inside our product to do specific new experiences that previously did not exist.

To start with, a lot of those experiences will go into the premium tier that I spoke about in the previous question in the shareholder letter. And there will be things like insights where we will actually provide users with detailed information about people that might be talking to that we can infer based on people's behaviors or conversations. Obviously, that will only be done with permission, meaning only people who agree to be part of our AI features will be able to see those features and we'll have those features or the information available about them in the app.

Another kind of product that we've built through AI is called A-list, which goes through all your messages and creates a short list of people that we believe you should keep talking to and gives you summaries of conversations that you have with those people, brings together all the photos that you've exchanged with those people, all in a really nice summarized folder that makes it much easier for you to navigate the product. You can envision that as the next step of that, we will add a little button that will be the gAI button, and you can start asking gAI questions about that specific user that you were previously talking to. So it's something that you discussed previously does not appear in the chat summary, you can say, hey, I believe we talked about XYZ, can you get that information back to me to remind me what it is that we exactly talked about. So very similar to what Grok is doing inside X, where you can actually get information about a specific post with a lot more detail that would be quite kind of -- that's quite beneficial.

So those are the kinds of features that we are working on. I don't know of a lot of consumer-facing products that are doing the kind of stuff that we're doing yet. But the same way that Grindr invented the use of mobile in the way it is used today, I think we'll be at the forefront of using AI in the consumer experiences in the future. And for advertising, I'll switch over to John to speak about that.

Yes. Thanks, George. We did have a good quarter in terms of our advertising growth. That's been an area of focus both through the TPA and then the direct piece. It's also a very nice contribution margin because it doesn't have the cost of sales associated with the subscriptions do come in through the app stores. So that tends to be more accretive to EBITDA, and we did see some benefit in that in the third quarter, you're right to call it out.

But more importantly, I wanted to focus and just remember -- remind everyone that last year, we had a pretty significant direct advertising boost in the fourth quarter that we don't expect to continue this year. And so that's contemplated in the range of guidance that we gave. And certainly, we think this is an area that can continue to be a focus for us and that it should give us opportunity for potential additional growth in the future. There is much more we can do here, and we've had good success with Brian and the advertising team, but we're going to continue to look for ways to grow that in 2026 and beyond.

[Operator Instructions] There are no further questions at this time. I will now turn the call -- we have a question, by the way, from John Blackledge from TD Cowen.

It's Logan on for John again. Just -- maybe one follow-up on the user base breakdown. It's really interesting. Could you talk maybe about any trends you've seen over time or since you've come on board, George, in usage amongst different age groups? Like have you seen any trends among older age groups or younger age groups like more engagement or less engagement over time? And do you think there -- like you may have any initiatives in place in the future to kind of boost engagement amongst specific age demos like maybe older people, for example?

Yes. Great question. Thank you for that. We debated whether we should put in more, but we thought for competitive reasons, probably kind of what we shared made sense because we do have obviously data on the things you're asking. So I'll try to speak to it directionally without being too specific because I thought that for competitive reasons, releasing more of that would be potentially risky.

What we know are the following things. One is our young adults, meaning people in the 18 to 35 age range, tend to do a lot of communication with each other, but they also get messaged a lot by older users, and they respond to older users as well, whereas the younger adult cohorts such as 18 to 30 don't actually initiate a lot of conversations with older users themselves. Since we know that they actually do respond to people who are older when they get messages, that is something that you could probably solve the product, right? Because I think what happens is a lot of younger adults, such as 18- to 30-year-olds, might feel uncomfortable messaging somebody who is older because they think, hey, this older person might want to talk to me. And that's why they're not messaging out to them, but they're getting messages from them and then they're willing to respond. And so that is something that we could solve through product by saying -- by having product features that kind of facilitate that a little better.

We also do know from our older users kind of in that 50-plus age demo, and I'm approaching that cohort soon. So I'm kind of learning about that more, is that sometimes they don't always feel as welcome in the app as they did before, meaning they all have Grindr accounts. But as they age, their priorities tend to change. And as a result, sometimes they don't quite feel as at home. And we definitely can do things, I think, through a product to make that experience be better for them. That is part of the thinking behind the premium tier and the AI features with insights, right? Because part of what we can do with insights is tell a user, yes, this person is likely to engage really well with you based on what we know about you.

And that I think would be very helpful for users who are older who might feel a little bit uncomfortable with the app because their priorities today might be different, right? If you are a 45-year-old or 50-year-old guy with kids living in the suburbs, your priorities are probably different than what they were when you were in your 20s and frequent circuit party. So I think those are the kinds of things that insights can really help solve, and that's something that we are envisioning. Obviously, older users do have more disposable income as well. And so I think the alignment there is quite interesting in terms of offering them better functionality that is unique through AI that is also creates a lot more value for them and so it is more expensive at the same time. Does that answer the question or any follow-ups on that?

Before we close, unless there are more questions, I just do want to add one other thing. Grindr is an 18-plus product only. We do not allow people who are not 18 on the product. You cannot download the product if you are not 18 on either Android or iOS, and you cannot log into Grindr by creating an account on the web. We only allow you to create accounts through the app stores. And so whenever I refer to younger users, I'm referring to people 18 and older, nobody below 18.

Thank you. This ends the conference call for today. You may now disconnect.

Moving. It's my pleasure to have the team from Grindr here at the conference this year, George Arison, CEO. George, thanks so much.

Thanks for having me.

I feel like this is the third year you're at the conference.

The third year I've done this as a Grindr CEO but I've done this conference actually in my last company.

That's correct. Right. [indiscernible] Alexandra before me -- before she went on to SAP. So thank you so much for always being part of it and always making yourself available. Really appreciate it. So for those in the audience less familiar with the company and the platform and what you're trying to build, why don't you take the opportunity to talk about a little bit of the evolution you've been on and the journey for the company.

So Grindr has been around for 16.5 years. We really invented the idea of using mobile device for local discovery, and we're one of the very first geolocated products on mobile, on iOS, launched in March 2009. And it really took off like instantaneously through word of mouth among gay people in the United States initially. To the point where like I've seen estimates from investors like 0.5 million iPhones were sold in 2010 because Grindr was iOS only at that time. So it's been a fundamental part of gay life ever since then. And it's an open architecture platform.

So you can talk to anybody you want, anyone can talk to you, and you can maintain messages going as long as you want. There's no like double opt-in kind of on Grindr, the way there is on straight product. So we don't really think of Grindr as a dating product. We think of Grindr as a social network that's used by gay people to connect to each other for any number of reasons. We just monetize the hookup, casual dating, relationships, et cetera, component of the experience, but people are doing a ton of other stuff on Grindr, and they don't leave the product necessarily when they're in a relationship. You can still see a lot of people who are using the product in -- when they're in a relationship because so much more is happening on Grindr.

We are in 190 countries around the world. We went public in 2022. And I joined about 2 months before we went public. And there's been a lot of company building that has to happen along the way. So we've been flying the plane while building it at the same time. And so far, like I think it's gone really well. We've been very focused on driving growth in our revenue while building a lot of product. So it's product-led growth rather than anything else, and we're very happy with the results so far. Yes.

So I think there's a lot to mine in there from what you said. But if you take a step back and you try to draw the distinction between dating and social connectivity and the intersection between the 2, how do you think about the addressable market opportunity for the company? When you think about what the user base might be or what the payer conversion might be? And how do you characterize how different that might look in different geographies?

So we did a survey last year right prior to the election in the U.S. asking -- we did a very targeted gay and [ bi man ] survey run by one of Kamala Harris' primary posters and co-run by a poster for John McCain. So it was a very high-quality, fairly expensive poll. And we actually -- one of the questions you asked, do you have a Grindr account or not? And 50% of people in that poll said they had a Grindr account. But when you look at our U.S. MAU, it's less than 50% of U.S. gay bi people in the country. And so there's about 1 million people in there that claim to have a Grindr account, but don't appear in our MAU.

So that's all, I think, like reactivation opportunity for us from a MAU point of view in the U.S., where people are -- kind of have used Grindr a lot before, but don't appear on our MAU because they don't use Grindr on a regular basis anymore. Obviously, we are way less penetrated in every other country in the world because we started out in the United States and then go everywhere else. And in a lot of places in the world, it was very uncomfortable people to be gay 10 or 15 years ago, which is a lot easier today. India is an example. And so in those countries, you're seeing much faster MAU growth. And so MAU for us is growing very well in there.

On the payer side, people oftentimes assume that having high payer penetration is a good thing. I actually don't think it's necessarily true because you want the free users in a product like Grindr to be as big as possible because people who are paying want to be able to connect with people both who are paying, but also people who are not paying. And the more options of core connections that you offer, the better off the users will be who are paying. So it's like one way to satisfy your not paying users is by having a lot more -- sorry, paying users by having a lot more nonpaying users on them and necessarily driving the product to be one way it's not usable if you're not a paying customer, is not a good thing at all, and we are trying to avoid that from happening.

We are increasing the surface area of the product by creating new product experiences that people could go and pay for if they wanted to. Some of the things we're building are premium. Some of them are only premium only, but you can still continue to use the core Grindr product without being a payer, and we want to kind of facilitate that very much. So free users matter to Grindr a lot. We also have a pretty big advertising business. It's about 15%, 16% of our total revenue. And that business obviously monetizes free users because we don't show ads to paying customers, and that's another way in which we make money as well.

Okay. Understood. Maybe sticking with the theme of engagement first. When you think about how the product has evolved with the goal of sort of incenting engagement across a wide array of users, how has the product evolved? And what are you most excited about in terms of engagement mechanisms that have launched most recently?

So Grindr's evolution was you see a certain number of people on the grid that you can talk to. Then Grindr added XTRA, which was our first paying subscription offering, and we showed you more people than we were showing you before. And then we added Unlimited, which shows you basically unlimited number of people. You can see anybody on the grid anywhere and you can talk to any of those people. That's kind of how engagement was driven initially, plus in that the chatting system is open to everyone, and you can talk to anyone you want. And whether you're paying or not paying, you can engage in as many conversations you want.

Grindr users sent 130 billion messages last year, which kind of tells you how, like, active they are in chatting. That's more messages per day per user in DAU than WhatsApp has in their product. And WhatsApp is just a chatting product, we're a lot more than just a chatting product. What we have been thinking about a lot now is creating intention-based experiences for people. Like they're there for a specific intent, how do you create a really good experience for them in that regard. So we built what we call -- right now, which is for people who want to have a connection happen immediately, they can use that experience for that.

We are now building a lot of dating experiences, a lot of dating features where if you're looking for a long-term partner, we'll offer you products for that to make it easier. And then concurrently with that, we're building a ton of features that are AI first, AI native features that are making the app a lot more targeted for the kinds of people you want to be talking to, which is something we never offered before. But now we can offer you a grid that is different from what it was prior in that it's targeted for your interests. And we call that Discover. And then within that, on the profile, we will show you not just what the user says about themselves in the profile, but insights that we, Grindr are able to glean about them and you see those as insights.

And those are all AI-generated insights. That is going to be all combined into a separate tier on Grindr, right? Like now we have 2 tiers for payment, XTRA and Unlimited. We're going to create a new tier on top, which is going to take all these AI features into that because they are very, very high-value features, and we believe they are worth a lot more than $40. And so figuring out what the price is something that needs to be still being done, but the idea of putting all that together into a tier is very much kind of the intention, which will then allow us to monetize a lot of the features that we're creating that add so much new value to the product in a different way.

Okay. Understood. Probably the biggest debate coming out of the most recent set of results was a bit of noise around the MAU growth. We spoke about this at night of earnings, and I'm sure you've been getting this question a fair bit. Why don't you talk a little bit about what you were trying to accomplish with a bit of a cleanup dynamic around MAUs because I think the inclination I heard from investors was this, they've overreached on monetization and they're harming the user growth dynamics. So maybe give your take on where this sits right now.

Totally. This is something that we have spent some time talking to people about. So let's kind of go through that. Bear with me as I do it, there's like 6 points I want to make. I want to have each of the points written down. So first, let's define what Grindr reports is now versus what other people do. We do not report users, we report device. So monthly active devices. And the reason for that is that a lot of our users have more than 1 Grindr account, and they might have like a travel account and a local account and a more discrete account. And they'll be using all 3 of them in any given month. And so if you report it at a user level or account level, it would come off like we're reporting 3 people when in reality, it's only 1.

And so we report device. And for you to get into our monthly active device reporting, your device needs to have a device ID. Not every legitimate Grindr user gets reported in that because their login does not have a device ID associated with that. You can go ask Apple and Android, mostly Android, why that's the case. But the reality is that there are people who we don't actually report out at all in our monthly active devices because their device does not have an ID that we can look to, but they are legitimate users that are using Grindr.

Secondly, we have been in a very active process of removing what we would classify as unwanted MAU or users that should not be in the product, meaning removing their profiles. There are 2 categories of people that we -- not people, profiles that we remove. Category 1 is when there is a device ID, and those get reported in our MAU. And when they're there and they get removed, they're no longer in our MAU, obviously. And then there are profiles that don't have a device ID associated with them at all. These are spammers who spoof accounts on Android using a computer and create accounts on Grindr, and we aim to remove those as well. Obviously, you need to do that for the health of the platform.

What we have seen in the last year is, one, increase in spam because technology allows you to create spam more now than it did before, meaning AI in particular, as well as a significant increase in our removals. So the increase in removals is in far excess of the spam increases that we've seen because our ability to identify unwanted users, meaning users who are engaged in illegal activity or in spam, a lot better than it used to be before. So we're removing a lot more people. Roughly 2x the number of accounts that are being removed -- were being removed in Q2 that had been removed in Q2 of last year. So it's been like a significantly larger number. That does not mean that our spend went up 2x. It did not. It's just that we were able to identify bad actors and remove them from the ecosystem a lot better.

The total amount of MAU impact that happened as a result of the removals that we have undertaken in Q1 and Q2 of this year and a little bit in Q4 of last year is in the hundreds of thousands, not in the tens of thousands, right? So we were sharing with you an adjusted MAU number that accounted for that change. The MAU number would actually be significantly higher than the number that we reported in Q2.

Even with that, though, the MAU increase was very significant, right? Like we grew MAU 6% year-over-year in Q2, even while we were doing all these removals. Now these removals are continuing because it's not a onetime thing that you need to do, and we'll do more of that. We think that ultimately having a cleaner ecosystem that does not have spammers in it is a good thing, and we want to continue kind of doing that.

And then lastly, I think it's worth discussing demographics of Grindr. A lot of other products have said that, hey, they're having trouble with MAU because their demographics are not looking very good, meaning young people do not want to use dating products for dating. We have not seen anything like that. Grindr is significantly over-indexed in the 18 and 22 category versus U.S. male population and in the 23 to 29 category.

And on the overall product, nearly half of our users fall into those 2 categories. So if we had any trouble in driving more MAU for things like monetization, that will be most impactful on young users because our payer penetration among young users is by far lower than it is for older users, which obviously makes total sense because they have less money and they are more successful in the product, even just using the free product because they're able to get what they want out of it versus if you're older, you might need to get -- pay because you're less successful in the product.

And so we don't think there's like any issue with Grindr MAU. Grindr good MAU, meaning wanted MAU is actually growing really well. It's just that as we removed more accounts, that kind of impacts the actual MAU growth number that we show. And as far as younger demographics, which are the demographics that matter the most for a product like ours, we are seeing nothing but growth and new people coming into the product all the time.

And last point on that is internationally, that's even more over-indexed on younger people. Like if you look at India, like 2/3 of the app is under 35, which is not surprising because it was illegal to be gay in India until 10, 12 years ago. So older men are less likely to be using the product versus younger men.

Okay. Understood. Last year, you laid out sort of a multiyear product road map. And as we sit here now, coming up on the last 1/3 of 2025, where does that product road map sit in terms of what's been deployed, what's soon to come? And how should investors think about executing against that road map on a 2-, 3-, 4-year view?

Yes. So we -- I think what you're referring to is our Investor Day, which was in June of last year, and we shared a 3-year plan for the product. We gave some examples. We didn't give all examples, obviously, in terms of what we're going to build. And then we had a Product Day last January, we shared, hey, these are the things we're going to launch this year. A lot of the products we're building are these intention-based products for specific unique intentions that people might have in the app, such as right now or relationships.

Another one that we're going to work on in the future more is around travel as well as creating AI native product experiences. So this is not latching on AI to an existing product and declaring that that's AI, that's silly, in my opinion. It's literally products that you could not create before until Gen AI existed. And so these are like AI-native AI-first experiences. And we are building all of those.

And I think we're like either on schedule or ahead of schedule on virtually everything that we had intended to build. Some of those things are either live to everybody. So right now, it's live to all our users. Others are in testing with a portion of our users. And others, we're actually holding back until we make certain pricing and tiering changes because we don't want to go live with them in our existing tiers. We want to only go live with them with higher-priced tier. So for example, Discover is an AI product that lets you discover people more closely aligned with your interests. But we don't want to release that to the overall user base. We're going to reserve that only for the premium tier, and so it's going to go live when the premium tier goes live.

Insights is also something that we will not release to a broader user base. It will only go to the premium paying users. And so we're holding those back until we get the premium tier out and ready to go because those are so valuable, the kind of information that you're getting from that is so powerful that I don't think it'd be fair to put that into a tier even at $40 a month because the value that you're getting from it is way more than that, and the company should benefit from that as well.

Okay. Understood. That dovetails with my next question will be when you think about user monetization, I know we've focused a lot of this on user growth and engagement so far. But when you focus on monetization, we'll talk about the ad tier, but away from the ad tier, how do you think about tiering? How do you think about the platform's overall approach to monetization evolving in the years ahead?

So in the last 3 years, we did the following 2 things. In 2023 and 2024, we launched weekly payment plans for people. That was based on user demand. We did not come up with on our own. I know it's counterintuitive, but a lot of people, especially younger users, prefer to pay for things on a weekly basis versus monthly basis. And so we launched weeklies. Those have been really successful and they drove a lot of our revenue growth and our payer conversion growth in 2022 and 2023 -- sorry, in 2023 and 2024.

In 2025, a lot of the focus was on driving more people to become payers rather than on things like weeklies, which drove ARPU up, even though that was not what we were aiming towards. We knew that as a result of weeklies, ARPU would go up. This year, there's not really much that we're doing to drive ARPU up, but there are things that we're doing to drive conversions up and those have been very active. We did not feel comfortable launching some of those conversion drivers until after we launched a lot more free product so that as we potentially took some things away from our free users, we wanted them to be experiencing a lot of new things.

So there was a little bit of give and take in kind of how that happened. Next year is going to be a lot around driving a price increase in our existing tiers because so much new things were launched in our XTRA and our Unlimited tiers. The value of those tiers went up. And now it is fair to ask users to pay a couple of bucks more for that than they were paying before as well as starting to launch this premium tier, which will be a driver of revenue growth in a significant way in 2027, though it will have some level of impact in '26 as well because at that point, the tier and the offerings in that tier are going to be fully mature, and we'll be able to kind of expect to have a large number of people go into it.

Now the premium tier is a very unique thing that we've never done before, which is we actually do not want too many people to sign up for that. So the price that we'll pick for it might be one that's very high for an average user. But the amount of experience that you're getting in that tier, you need to really kind of offer in a measured way. So think of it a little bit as like Disney, they have a new like Lightning Pass where you basically get to skip a line in every ride only once.

So our, like, premium tier is something similar to that. And they don't offer that to everybody. Like you have to get in line and get it in a specific day and you might not get it. And so we think of premium tier the same way. We don't want to have everyone to have it because if too many people have it, that might actually degrade our users' experience, and we don't want that to happen.

Okay. Understood. You referenced earlier the size of your advertising business today. Against that size today, when you think about the base of users you have, how do you think about drivers of advertising going forward, whether it be ad load, different types of ad offerings, U.S. market versus international markets? What's the scope for opportunity there?

Totally. So when I joined Grindr, my hypothesis was that we were not leaning into advertising anywhere near enough. And frankly, if we didn't do that, then we might be pushed towards having to monetize more of the free users, i.e., doing more things to drive more free users to become payers that would degrade their experience and that was necessarily not the ideal thing. Why not lean more into the advertising. And we kind of saw a 3-part process for what needed to happen there. Number one was just increase the total number of ads that we have in the product.

We were showing people like 2 ads an hour, which is like very, very low. I think we were very successful at driving the ad load up in the United States. We're now closer to like 8 ads an hour, which is still less than a comparable social media product, but it's a lot better than it used to be. And we did that without seeing a decrease in our CPM per ad by adding a lot more third-party advertising partners, we're able to fill the supply that we're creating from these additional ads.

So I think in the U.S., we've like reached the max of how many ads we want to show per hour, per day. In Europe and Asia and Latin America, we're not yet at the same level, probably because the third-party ad ecosystem in these parts of the world is not as developed as in the United States. So there's still some opportunity for more ads there, but not in the U.S.

The next step for us is to replace the kinds of ads people are seeing with the types of ads that are both more valuable to us and have higher quality to the user. That includes video ads and rewarded video ads as well as native ads that are more targeted and allow you to like exit the ad when you're looking at it and replace with a different ad. So we are -- and that will also have high CPM, right? Both of those ad formats actually have a higher CPM.

So next year, we expect a lot of the revenue growth in ad business to be focused around this transition from current type of ads to these higher quality and more premium ads. So that's kind of the second leg of this stool that we're working on in terms of our ad revenue growth. And then the third one is around the direct advertising business. So these are when we actually partner with an advertiser to have ads in Grindr directly rather than through a third party.

For me, probably the single biggest change in my opinion since I got here was around this third-party business. I was a lot more bullish in being able to get more advertisers to sign up to work with us sooner than I -- than it has happened. But unfortunately, the Anheuser-Busch incident took place along the way 2 years ago, and that really made it a lot harder to get advertisers to work with us at the pace that we actually wanted. I'm a founder, and so I don't give up when things going to stop happening is that we're going to continue pushing on this, and we believe there is a huge opportunity.

We just need to cast the conversation here in the right way where for Grindr, Grindr is full of high income, lots of disposable income of gay men who are not only wealthy and are able to spend things on experiences and luxury products, they also set trends, right? They start buying something, then they tell their girlfriends about that because girl friends go and get their husbands and/or partners or boyfriends to buy those things as well. And so you can, like, really use Grindr as a trendsetter for luxury brands and luxury experiences.

And that's the way to kind of, I think, lean into the advertising story. This is going to take us, I think, longer than I had anticipated. But fortunately, we've been able to drive a lot of growth in our ad business without the direct advertising business having to do things. We feel really good about how that's going so far and what will happen in '26, '27 on the ad side as well.

Understood. You've alluded a lot so far to AI and elements of machine learning and what can be built for the company. Talk a little bit about how the platform products, certain initiatives are increasingly being driven by AI and ML and how you plan on bringing some of those to the market in the years ahead.

So I had built an AI company in 2018, 2019, 2020. And so coming into Grindr, like one of the things I was most excited about was the data that Grindr possesses because unlike previous platform shifts in technology, AI is best when there's a lot of data. And so -- where like mobile, for example, was massively beneficial to start-ups. The AI shift actually is really beneficial to incumbents if the incumbents make the transition quickly enough. Now most won't, but those that do will be able to create competitive advantage in their user experiences that no one else will be able to have, and that will be long-term competitive advantage.

So we've been really thinking through AI and how to drive that from the very beginning of me getting here. And that's kind of what we're working towards. The infrastructure that we've built for our AI products and experiences is no different than what most advanced AI companies out there are doing for themselves. Like when I meet AI founders of these super successful AI products, I'm not talking about foundation models, but like products that are built on these foundational models, their architecture, their infrastructure is no different than the infrastructure and architecture that we're creating, which makes me very proud because here, we are like a 16-year-old company doing the same thing and really transitioning the product to be much more AI first and AI native.

So now we're in a place where we can actually start utilizing this infrastructure to build actual product experiences. So the product that is most AI forward on Grindr right now is called A-List. It goes through all your chats that you've ever had and creates a subset of those chats that the AI, which we call [ GayAI ] believes are most relevant to you for the long term. And it kind of creates a summary of the conversation that you've had, whether -- whatever information you share, whatever information that person shared with you and creates a different list of people that we call the A-List that you can go to.

All the images and media that were shared between people is also going to be there, which is really valuable because obviously, people really care about that video. And you kind of see this like short list of people you should be engaging with. That's going to form the cornerstone of our premium tier, and we think it's going to be a really kind of game-changing offering into Grindr.

And then secondly, we have 2 other big AI features coming out. One is called Discover, which takes all the information we have about users and slowly start utilizing it to offer you a set of profiles to look at that are more targeted to you.

And then the third one is Insights, like, for example, showing a person that, hey, you are interested in this our user, this our user really tends to respond heavily to people in the 35 to 45 age category, even though they are only 25. And so if you are a 40-year-old person who is seeing that, that will give you the confidence to go and e-mail that person, whereas otherwise, you might not have that confidence, right? And so that Insights piece is going to be really critical as well.

These are all very new. Usually, when we launch things, the first iterations are not perfect. That's totally fine. That's how products -- you launch an alpha, then you launch a beta and then you kind of innovate on that. 0 to 1 is always way harder than 1 to 2 and 2 to 3. And so we are really psyched about where we are in this development now, but it is very much in the 0 to 1 stage. Like we're launching V1s of these products, not V2s and V3s and over time, they'll get a lot better. So I would not have people expect financials necessarily like right away because we are going to give these things to -- time to mature and develop. But ultimately, I think they'll be very, very successful.

Okay. I know we only have a few minutes left. But when you bring all of this together, what do you see as the key strategic priorities to deploy growth investments into the company over the next 12 to 18 months?

Yes. So the way we think about Grindr growth is along kind of 3 vectors. One is core app. We want the app to continue to monetize really well, and I talked a lot about today how we're doing that. Second one is AI and all these AI features and kind of monetizing those. And then the third bucket of growth for us is building new products that are not necessarily directly tied to Grindr, the core connections app, but are offerings that make a lot of sense for gay men and where we can use Grindr, the core app, as a distribution engine for these new products and services that we are starting to offer people.

We call these Gayborhood expansion opportunities because we're building the global Gayborhood on the phone. The first thing we've launched so far is Woodwork, which is a telehealth platform. But its first offering is ED medications, but it's going to extend into many other offerings over time. We purposely don't talk about that in earnings calls. I think I got some rumors that people like, oh, you talked a lot about it in May, but then you can talk about it in August. Well, in May I also did say like do not expect updates on Woodwork for a while on purpose because we want to give this very small nimble team that is working on Woodwork the time to be able to build basically a new company inside Grindr.

But it's using Grindr as a distribution engine, which means that its CAC for customer acquisition is really, really low or 0 and building a new brand. And that's all going really, really well, and we're really happy with how that's going. So that's one business we're launching. We have a second business around luxury experiences that we're launching that is not live yet, but it will go live kind of next year. Similar thing, like we're not going to talk about that very much because we want to give the team time to get it right.

And then the third one is already in the works that's going to be stuff for now, but it's actually probably the single biggest business opportunity that we are pursuing. And the goal is to have like 6 or 7 of these new business initiatives that are using Grindr as a distribution engine live over the next 3 years, knowing full well that not all of them are going to work. But if 3 of them work, that would be like a huge win for us over the long term because then we can drive this kind of growth, not just for the next 5 years, but for the next 10 and 15 years.

Last question for you before we lose you, just in terms of capital allocation. So those are the areas of investment and growth. You've laid out the growth narrative. How should investors broadly think about $1 of capital either going back into the business or coming back in forms of return you have been opportunistic with your stock on the buyback front?

So one thing to say is all these business things that I mentioned, the new businesses. The cost of launching these is all accounted for in our 3-year plan as far as EBITDA guidance that we gave, but none of the revenue is. So all the revenue is kind of incremental to what we guided towards. I run a pretty lean ship. So we kind of peaked in at 225 U.S. employees and 15 people in Asia. And 3 years in of me being there, we are at 150 U.S. employees, maybe 155 now and 30 people in Colombia.

So we are not even back yet at the stage of where we were at our peak. That's because we did a return to office. A bunch of people said they didn't want to come back to office. I said, great, you don't have to come back to office. Self-selection is a good thing. But the people we did keep and people we've hired are being way more productive, and we are very, very lean. I believe in really lean organizations because I think those are way more effective at getting stuff done.

So we run a very high revenue per employee number, probably a little bit too high, honestly, right now in as much as like everyone is telling me, George, we need a lot more -- a little bit more people. But even at the end of the year, we will not be close to the number of people that we had in 2023 January, right, even though the business has doubled in size since then. So I think we will definitely continue to hire, but we'll still generate a ton of cash, and our EBITDA margins will remain very, very high. Our 3-year guidance is 39% to 42% EBITDA margin. We've done a little bit better than that because we've been so lean on people, but like that either one is a great number.

And otherwise, we'll return capital to shareholders. Our focus has been through the buyback. We've actually been, I think, using the buyback pretty aggressively this year, and people should expect us to continue doing that into the future. We think our stock is very cheap right now, quite honestly, given what we are delivering and what we can deliver into the future.

Again, Grindr is not a dating product. Grindr is a social network, and I want investors to think of it as a social network and value it as such. And we are one of the very first existing technology companies to be actively moving towards creating our products that are AI-driven, not bolt-ons on top. And I think we'll be very successful at that. So that's how we think of value in Grindr. And obviously, in that sense, our share price is not reflected in that, and we'll be as aggressive as we can be in returning money back to shareholders.

All right. Well, all super clear. I think we're just inside of a minute. So we're going to leave it there. George, thanks so much for being part of the conference. Please join me in thanking Grindr for being part of the conference this year.

Thanks, everyone, for joining. Ygal Arounian from the Citi Internet team. Pleased to have with us Grindr's CEO, George Arison; and CFO, Vanna Krantz. Thanks so much, guys, for joining us. We'll take some audience Q&A later. If anyone has any questions, pass around some microphones.

Yes. Well, let's jump right in. Thanks, guys, for being here. So George, you've been at Grindr for about 3 years now, taking the company, which is already the category leader, and it's kind of been through a major overhaul. So I think just a good place to start would be how has Grindr changed over the past few years? And kind of what's the vision for the platform over the next 3 to 5 years?

Yes. Actually, announced me joining like [indiscernible] or something like that 3 years ago. It's been really busy journey, way busier than I thought it would be. We had a lot to do that I didn't realize. We went public about 2 months after threshold up. And that was great, but also a lot of work to get ready at the very end.

Grindr had been owned by the Chinese and then had been sold to a consortium of American owners in 2020 right around COVID kind of being at the peak. And then they knew that they need to take the company public, so they did it really fast. We realized once we got there, a bunch of us got there that the team was not what a public company team should be, both from the point of view of just like being able to have expectations and then meet and beat those expectations, but also how they perceived the role of this company, which always has a very big public advocacy role for gay people. But in their minds, it was like that first and then a business second and not business first and then advocacy second. And there was no way to move them towards kind of the direction we needed to be in as a public business.

Additionally, it's like work habits were not aligned with what I would expect them to be. So we had to make a really big change. We went through that in 2023. We returned back to office earlier than most companies did. And as a result, a lot of people chose to leave. So today, almost 90% of the Grindr team that works at Grindr has been hired since I got there.

So from like just -- if you think of like people build companies, not companies don't build companies, right, ideas don't build companies, people do. And so we've completely rebuilt who is there and who is building this business to being much more public company caliber, high-growth tech caliber team, similar quality engineering talent and similar quality product talent and the rest of the company talent that you would expect in a business like us that has as much potential as we do.

And then secondly, we didn't really have a very clear vision of where we wanted Grindr to go. You're right that Grindr was the dominant platform is the dominant platform for this particular user base, although we compete with products that are not just for gay people, they're for a broader audience. And so our competition base is like Instagram, Pinterest, Hinge, et cetera. So there, obviously, we're not dominant. And from that sense, we need to develop a product vision for what we wanted the company to be. And we did that, I think, very successfully in Q4 '22, Q1 '23 and then presented out as this idea of building the Gayborhood, where Grindr is at its core, this really powerful product for gay and bi men.

We have a very special connection to that user base around the world. But that gives us the permission to build new businesses and new verticals on top that are expansions of what we do rather than just the core connections use case that we're taking care of today. And so that's what we are executing on, I think, very successfully now, driving the core business to grow significantly while investing in these growth businesses in a moderate way towards the direction of like having three of them being very successful by, say, 2028, 2029, driving a meaningful portion of our overall revenue story.

Okay. Do you want to elaborate on what those growth initiatives are?

Yes. We've never like given specifics other than in one particular case before. We've given a broad view. And by the way, in our 3-year plan, all the costs of these are paid for, but revenue is not assumed at all. So it's all incremental revenue to what we said in our 3-year plan.

The one that we are actively talking about publicly is around health and wellness. So we launched a product called WoodWork, which is a Grindr version of ED medications, but that's meant to be a platform for launching many other medications on top of that as well to build out like a gay-focused business like HIMS or like Row, which we think can be a huge opportunity and not just for cosmetic medications like ED medications or hair products for skin care, but also more life-saving medications around delivery of PrEP which is something you take if you want to avoid getting HIV.

A lot of men in America are on PrEP, thank God. Many more should be. And frankly, no gay person should not be on PrEP because it's a huge part of getting to zero HIV transmissions a year. And Grindr has had a massive role in getting people to accept PrEP as something they should use, but I think we can do a lot more there and actually then drive the revenue story from that as well. So that's like one bucket. And this is everything like over the long term. It's not going to happen in 1 year. This is probably a 3-, 4-year journey as we build out that health and wellness vertical.

And we started out with the ED medications first, which we launched in April, May of this year. And I told everybody in our May earnings call that like I will not be talking about any data related to this until it's time. I want that team to be operating like a start-up, and they are like they're a 3-person team, super grind focused, like they are not allowed to have too many resources, not because we can't afford to put more resources, but because I don't want them to have more resources. Like a start-up would have a finite amount of resources, a finite amount of budget for marketing, and they should operate the same way to prove out their business.

The other vertical that we are going after is a combo of travel and luxury experiences. We're starting with luxury experiences. Average gay household in the United States has 2x the income of a straight household. Gay men have 2x the number of MDs, PhDs, JDs, MBAs that a straight male does in the U.S. So their income is very high on average, and they have a lot of disposable income. So we think offering luxury experiences through us makes a ton of sense. And so that's another one that we're working on really actively. And then we have a third stealth point, which we don't publicly talk about that's an AI, and it's the biggest opportunity probably on paper. Let's see if we can kind of go and capture that fully.

But we have talked about the fact that we are doing some really cool innovation in AI even at the model level, kind of retraining a lot of models to understand gayness a lot more. And I think that creates a huge opportunity with the product as well.

Got it. We'll obviously come back and dig into AI a little bit more. But it sounds like the -- I mean, not -- it sounds like it is the mission for Grindr is much more than just a dating platform.

Grindr is not a dating platform. Grindr is a social network for gay and by people around the world. And we monetize the dating portion of what people do on the app. But people do a lot more on the app than just hookups and dating. So people, I think, should think of Grindr as like an Instagram or a Pinterest for gay people with a subscription-based monetization, which those businesses do not have.

Got it. Okay. And I guess that speaks to -- I'm going to jump around a little bit here. But when you look at the data, the engagement level on Grindr is significantly more than what you would find on a traditional dating app. So can you talk about that a little bit? I mean -- or maybe just help people understand like how much time you're spending on the dating side versus the lifestyle side?

I kind of stopped describing how Grindr works for people for a while, but I think I realize I need to do that more. So I'm going to do that, bear with me for those who know. So Grindr is a completely open architecture platform. When you open it, you see a bunch of people on a grid. Each of those is a profile or a user account, and you can e-mail anybody that you see. There's no limitation on who you can talk to. Unlike traditional dating products that all came after Grindr, but that have this like double opt-in, where each person has to say, I'm interested in somebody for there to be a communication opportunity and a message.

That open architecture, only limitation on it is how many profiles can you see at any given time, a free user sees 80-ish profiles, paying subscribers sees anywhere between 600 and unlimited number of profiles depending on their subscription tier.

And if you move from here to, say, 2 blocks away, the sets of people you'll see even if it's a free user will be different from what you saw here because all geographic based on distance. And so we don't -- like a free user still gets a lot more than 80 profiles because we give you new ones as you move around. So that open architecture creates incredible amount of messaging in the app because the primary way that people engage with somebody else is through messaging.

Our users sent about 130 billion messages last year. On a daily active user basis, that's more messages than on WhatsApp a day per user. So it's a very heavily used messaging platform. And communication is about all number of things. It's not just about dating. It's like, hey, I'm going to Singapore, like I want to figure out what to do in Singapore and like talk about that. So that's kind of the core thing that makes Grindr work. And I think that's what drives our engagement to be as high in terms of time spent, right? Because it's such a heavy conversational experience that people are either talking or looking at profiles the same that you'd be looking at profiles on Instagram or somewhere else.

And that unique openness gives Grindr its magic. That's also why just thinking of Grindr is like, oh, they can to just monetize, monetize by driving more people to become payers is the wrong way to approach it because you do not want to degrade the free experience in any way, especially on this messaging experience. That's the magic that makes every person who turns 18 who's gay, come to Grindr. Our user base is very young in its kind of overall body because all the young people that turn gay come to Grindr. And partly just learn about what it's like to be gay. And the openness in communications is critical to that. And so we have no user acquisition cost because we are so open, and we would never want to change that in any direction.

Got it. Okay. How much of your users are using Grindr ex the dating side? Is that like a way to think about it just as we think about like the engagement and...

We don't really measure that at all. I mean, we probably could, but we don't. I mean, look, we know that of the gay existing relationships in the United States, like long-term relationships, 3.5 out of 10 originated on Grindr. And that's a pretty remarkable number, right, because this is measuring all gay relationships and Grindr has been around for 16 years.

So in that sense, it's a really big part of people's lives. But I think all the other use cases are pretty important. We do survey our users and say, "Hey, like what are you 1.4. And I don't remember the exact numbers, but orders of magnitude, like 80% of them will tell you it's like hookups and dating, 50% of them will tell you like social engagement friendships, 30% of them will say networking, like that's broadly the kind of how it falls out in terms of what are the use cases.

Okay. Yes. I'm going down this path because you're certainly from investors and I guess, thought of more like you bucketed into this like dating app category, but it sounds like you're a lot more than that. And the monetization model also sounds like can be built out in a much different way. To your point on you want to be careful about how you're putting in monetization and not blocking people from coming in. I think that's been a challenge for the dating app business model. So maybe elaborate on how you see the monetization model developing over time and what your vision is for it, if it's a little bit different than how people normally think about it.

So today, we monetize 1 of 2 ways. We have subscription products and a la carte, and that's about 85-ish percent of our revenue. And we have an advertising business that's about 15% of our revenue, and that's a lot more than operating products. But that business is almost all -- not all, but a very large part of it is third-party advertising. There's a huge opportunity to grow that business through direct advertising over the long term. We probably shouldn't have any third-party advertising. We shouldn't be all direct advertising to like trendsetting gays, right? Like that's the pitch to an advertiser for why they should come to Grindr.

In subscriptions, we have 2 tiers. We have a $20 tier, $99.99 tier and for $39.99 tier. These are U.S. prices. Obviously, they are different abroad, but roughly the same broad kind of model. Grindr has not raised prices in 7 years, even though inflation in 7 years is 25%. So the amount of value that we're creating for people in each of those tiers is a lot more just purely based on inflation, plus we've launched a lot of new things in those tiers. And so we've also added value on the other side.

This quarter, we started for the first time to experiment with price increases. And so that is going to be a big part of our story for the next 2 years because we do think we're significantly underpriced versus what we should be offering. So we don't expect that to happen all in 1 day, but we want prices to go up. I'm not promising a $5 price change on extra and a $10 price change on unlimited to match with inflation by any means, but there is room, I think, there to push prices up. And I think we should because we've done so much more in terms of value in both of those products.

And then concurrently with that, we've created a lot of products, especially our AI products, and we can talk about what those are in a minute, that are way more valuable than $40. Frankly, like it's just the value that people are getting from them is very high. And so we are exploring creating a more premium tier above our $40 tier. I don't know if it's going to be $60 or $80 or $100, we'll let the market decide through testing, but we will probably launch a more premium tier.

And frankly, one of the reasons we want to do that is because we -- these AI features are so powerful, you don't necessarily want everyone to have access to them because you cannot meet everyone's needs if it's available to everybody. And so it's okay if only a small number of people sign up for them, but they're paying a really high dollar amount because that creates a better user experience. So think of it as like I don't know if anyone has children and goes to Disneyland on a somewhat frequent basis, but lines are very, very long. And then Disney has like a couple of premium ways to cut the lines, but they only allow about 80 groups to be using VIP tier at any given time in the park.

And the reason is because if that number becomes bigger than that, it starts to degrade the experience of the regular people, like quite for just a regular ticket because they see too many people skip the line and creates a bad experience. And so I tend to think of our premiumization in the same way, like we don't want to give the very high premium tier to too many people because that might degrade the experience of our lower tiers.

Got it. Okay. A few more, we're going to come back to that. So we talked about the overall experience with people use it. We talked about the monetization angle. Let's talk about user growth. That's another area where you guys have been outperforming. MAUs were up 6% sequentially in 2Q. Where do you see MAUs trending longer term? And kind of where does that growth come from?

Yes. We tend to think of MAU growth as being so far purely organic because Grindr has not historically done much to drive MAU growth. It's been purely word of mouth is kind of what's made it happen. Obviously, we are further penetrated versus TAM in the U.S., in the U.K. and some of the other countries like that versus where it might be in India or Philippines or Thailand or all across Latin America. And the total TAM is growing in those countries a lot more because more and more people are getting comfort to be able to be using a product like Grindr in their lives versus where they were 10 years ago.

Like 10 years ago in India, it was illegal to be gay. It's not the case anymore. Now certain states in India are talking about gay marriage and the speed by which that's happening is much faster than has previously happened elsewhere. So obviously, TAM will grow with that. We are -- our view is if we're adding somewhere between 0.5 million and 1 million actual net users a year, that's really good, and that's kind of where we've been over time. So maintaining kind of that steady pace is step one.

Percentage might not always be the same because we're talking about total users versus what the percentage might be. And then beyond that, we have an estimate of like how much more can we gain over time and what can be done to gain those users. And that's a pretty broad number, like -- but we don't expect to be going after that broader number probably for a little while because we do need to do a lot of investments in the product to make it happen. And the way you would go after a bigger MAU than just kind of steady-state growth would be, number one, better brand abroad. We have very, very high brand recognition in the United States. It's over 90%. But we're only about 60% in most of the countries where we have measured it with gay men. So that 30% difference obviously makes a huge difference in who's using you because if they don't know you, they can't use you, especially when you're in a word-of-mouth business.

Second one is around just trust in the product. There is a lot of historical brand debt that we face in certain places, particularly true in Latin America and cleaning that up is going to take us some time, all very doable work, but something we need to focus on.

And then thirdly, localization of the product and how we talk about the product in the app stores, for example, is also another really big opportunity. We've never done localization. We use literally the same imagery, mostly from America in every other country around the world, it makes no sense. Why are you showing people in Korea, images from America, like that we should not be doing that. Two like maybe the product should look a little different in India because in India, people are very uncomfortable showing a real picture in the profile. Whereas here, that's not an issue. And so when you get a grid of users that's all either blank or images of like states in India or famous buildings, like that's not a very helpful experience for users. So we probably eventually start thinking of how do you localize the grid in a place like India. We wouldn't do that for every country, but for a place with as many potential users as India or Philippines or Brazil, maybe some level of product localization also makes...

Got it. What's the international revenue mix right now?

Vanna, do you want to speak to that?

Yes, it's just under 50%.

Under 50%.

Under 50% correct.

Users is more heavy.

Yes. Our MAU is about 75% international.

Okay. And that's still more of the growth opportunity today.

A lot more of course.

Okay. Maybe, Vanna, just to follow up with you on the 2027 financial targets that you've said I think you guys have been tracking well towards that. Maybe just bridge us from here to there, the puts and takes on it and how good you feel about getting there?

Sure. We feel great about getting there. And our targets that we put out were between 20% and 25% revenue growth. You can see that we've been on the higher end or exceeding that pretty much every quarter. And with respect to EBITDA, it was 39% to 42%. We've been at 43% for the last 2 years. We put out our guidance for at least 43% again this year. So we are tracking very nicely to our long-term targets. And remember, our long-term targets were our core business, not any of the Gayborhood initiatives that we are just starting on. Like George said, we're incubating them. They're like start-ups, and we expect them to be a larger and larger part of our business. But in that 3-year plan, that was not part of that.

So we're tracking very nicely. We've had some very nice successes in our business to date with respect to optimizations and really just a lower price point. We've introduced the Weeklies. As you know, those were massive home runs in 2023 and 2024. This year, we had a series of optimizations and small features that have added up to nice growth and we are targeting our guidance is 26% or better, and we're on track.

Can you talk a little bit more about the advertising revenue because that's another area where you think you guys have outperformed the category. I know I'm understanding better now the category is bigger than what I was thinking of, but that's been an area of strength for you guys as well?

So when George started as CEO, he really wanted to focus on advertising, so we did. And we turned it into around 15%, 16% of our total revenue. That was the number that we gave out at Investor Day last July. We're sticking to that around that ZIP code. The growth rates have to be a lot higher because, of course, that business is smaller than the direct and a la carte business. It's got two real components, the third-party advertising component as well as the brand component.

On the third-party advertising, I'd say that we have levered up some of the volume component, like the quantity of ads, not only domestically, but also internationally. But more importantly, now we built the tech stack over the last 2 years to enable much higher CPM type ads. So native ads, rewarded videos, things that are more interesting to the user, more applicable to the user and generate a lot more CPM. We do not think we are done with -- we certainly don't think we're done with brand. We're still working on really hitting high gear in that one. Probably on TPA, third party, we're reaching our limits on U.S. quantity, not international, but certainly still room on CPM. So we see that as a very durable growth, double digits going forward.

Got it. Okay. And you guys have hit on it a little bit, but just to expand again on EBITDA margins. I mean your margins are really strong, the higher end on I said really strong. The higher end of what you'll find on pretty much any in that business model. You are investing for growth. So how should investors think about the margin profile from here, the balance between investment and margins?

We -- I'll start, and I'm sure George will have some stuff to add. But we are very happy with our 43% or better margin numbers in the sense of we think it's the right balance for now of investing in the business and giving back to shareholders. Truth is that we have a structural advantage because we have zero CAC. So we don't spend any performance marketing. That is a massive structural advantage.

We also keep a very lean team. We have around $2 million of revenue per head. That lean team as well as no performance marketing is like a very nice tailwind to keep the EBITDA margins high. That generates a lot of free cash flow. That cash flow, we invest in all of the Gayborhood initiatives, which are predominantly people, but more so AI, I would say, AI initiatives, the cloud computing, things that are just helping us keep the business going at these incredible growth rates for the long term. So we think that's about the right number. Of course, 39% to 42% is our target, and we intend and fully expect to be always hitting that.

I think we benefited on the EBITDA by like, I don't know, 1 percentage point or something in '23, '24 and '25 because of the team change that we made because we then we're just operating on a very small team for a long period of time. We do need to eventually to like at least minimum get back to where the team was in 2022, right? Like we peaked at 225 people, and we're not even close to that number right now.

So there was a benefit there, even though we were -- we added a lot of contractors along the way to help us kind of get through that period. So I don't think people should expect any expansion beyond where we are, but 39% to 42% feels really good in terms of having no concerns about investments, but also delivering very good results.

Got it. Okay. Let's shift to AI and products. So -- this past quarter, you had a few slides, can you delve into the AI product a little bit more in the platform. Can you talk about your strategy? You talked about gay AI and maybe just explain what that is and how you're approaching AI benefits and kind of walk us through that.

Gay AI is a little bit tongue-in-cheek, right? So everyone kind of realizes like it's not anything fundamentally different than anyone else. It's just that I spend a lot of time talking about AI and our Head of Marketing, who is very good at branding, who would listen to like, oh, like we are like gay AI, kind of -- it's really good. It's really -- yes, I know. So that's kind of what we did. And I put out that deck because I was getting so many questions around like what are you doing that's different and why are you doing it that I think people don't quite understand how existing incumbent companies can dramatically benefit from AI.

Normal technology platform shifts, and I was like very active in the last platform shift because I started a mobile app company in 2007, and we put apps on BlackBerry and Windows mobile devices like back then, which was fully unheard of at that time. And like they really benefited start-ups because start-ups like we're doing something totally new on a totally new platform. That's very different in this platform shift towards AI because AI only works if you have the data. And the people -- and then you have distribution, obviously, as well. And incumbents have an incredible amount of data, and they already have an existing distribution of some kind with the users that they work with.

And so this platform shift, if an incumbent uses it really well, has the opportunity to create unique competitive advantage for you for the long term in a way that's very different from what happened with mobile last time around. Now some incumbents won't go after it or most will not go after this opportunity. And eventually, the start-ups will catch up with them on the data and the distribution. But if you do, then obviously, you'll have a big advantage. Quite frankly, like ChatGPT should not exist, right, in total fairness because there are companies and one in particular that had more compute than anybody else that had all the engineers that were out there and invented the technology on which it's built. But it did not take advantage of this incredible distribution and data advantage that it had and allowed somebody else to arise.

I don't want us to ever be in that position, and that's why I want us to invest in AI, very targeted at our users. And what we're doing is we're not building a foundation model. Obviously, that's not necessary. But we're taking existing open source models and retraining them to be more gay-centric in terms of like identifying the male body and being able to create imagery a lot better, be able to understand uniqueness of what gay people talk about and how we talk about those things. And so far, that's been really helpful for us and then really good.

Secondly, we're taking the kind of more foundational work that we've done and implementing into our architecture because for an incumbent to be able to use AI really well, they need a very strong architecture layer around it. And that's both in terms of how the team is coding and how the team is working, but also in like what's actually being used in the architecture of the products that we're creating. And if you go to like any very successful AI native company and ask them to describe gay AI architecture and then you look at ours, like it will be exactly the same, which gives me like a lot of -- I get very excited about that because here's a company that's been around for 16 years and is rebuilding its core architecture in the very same way that an AI native company that started a year ago is doing, which I think speaks to like the technical powers of the people that we've been able to bring on board.

And then lastly, we are creating AI native products that would not have been possible before rather than layering AI on top of existing products to try to pretend that there a lot better. So one of the products that we created that's most out there and I think is an incredible user experience is called A-List. So we go through all of the chats that you've ever had on Grindr. And we create a short list of people that we believe are the right people for you to focus your conversations on, put them in a list. And then in addition to that, bringing together all the photography that you shared together into a folder, which is like very, very valuable for our users and then writing a summary of the conversation that you've had with this person. Reminding you what he's told you, what you've told him, what information was shared. And that's all like accessible now in one place.

Like, frankly, I want an A-List for my Gmail, I want an A-List for my Instagram, right? Like that's a Grindr-specific product, but something that I think other companies will start doing as well. We launched chat summaries for people on Grindr in January. Chat summaries didn't go live on Gmail until about April. So like I know it's only 4 months, but that's like a pretty big deal that Grindr did something like that way before other much bigger tech companies did. And what we have in A-List now is just the beginning, right? The next step of this will be to use the summaries that we create to derive what your interests are that are actually like real interest, not the ones that you summarize in your profile because people don't actually say the truth in their profile, but they say the truth in the chat.

And then based on that information and your true interest, match you with people in a better way, which I think will be really, really powerful because you might be matched with somebody further away than you are today, moment looking at people. But if that person is really the right connection for you, why not engage in that conversation. And if we are very, very transparent with people about it, then I think we'll trust it, and that's kind of how we are doing it. I want to -- just for the sake because I think this might be public to like reemphasize, we do not force our AI products on anybody. People have to proactively say they want to be part of the AI experience and only then do they get the AI features. And so we are not like in the business of, hey, everybody is getting AI here like what Anthropic did last week, I think, is really irresponsible where they're now saying that you have to proactively opt out of having your data in the training of the model. We would not do that. We actually went out and proactively asked people to say they were okay with that and the data being used.

On that note, what kind of adoption are you seeing? And when people are adopting like are you -- anything like measurable on better matches? Or is it too?

It's way too early for that. And again, frankly, I am not sure yet I should promise these AI features to everyone. Like I think these AI features are really, really powerful. And the best way to ensure that we can stay -- keep the quality to be as high as we want it to be is to limit who is using them. And so most likely outcome will be that we'll take a lot of these AI features and put them all in one tier that will be like a more premium tier to what we have now and have a small set of users having access to it for a while.

And then as we learn more about it, then kind of democratize it, right? And I think a bunch of AI companies have done the same thing, right? Like you don't get ChatGPT's most advanced capabilities on you're paying a very significant amount of money. On rock, it's $250 a month, right, to get those. And they know that not going to subscribe to that, but they want to limit it because the technology still needs time to grow and develop.

Okay. Got it. We have less than a minute left, but any questions from the audience who want to squeeze in? Okay. I wanted to spend a little bit more time on product. Unfortunately, we didn't get to it, but maybe I'll just leave it kind of open for you in the last 30 seconds outside of the AI stuff, product features that you're working on that are really exciting for you?

Yes. So we added an experience into Grindr called Right Now in the last year, which is like a massive expansion of the product space inside Grindr because before we had like the grid, we had your messages and we had favorites. It was pretty much like the core app. And now you have Right Now. So like in that sense, we just added 25% to 30% new space to the app. It's very well used. About 20% of our, I think, our weekly active users are using right now in any given week. That's just people who post in it. There's also a huge, much bigger number of people who look at profiles in -- right now. But there's still a lot of opportunity to make right now be a better user experience.

And so to me, the way I think about it is Grindr started out as a casual dating product back in 2009, and then it's become a lot more for users. Right now, as a new space is allowing us to keep the casual connection use case be awesome, which is core to like what Grindr is. And frankly, sex is core to being gay, right like the reason someone is gay is because of their sexuality. And so while we do all the premiumization on top. And I think that's a really important nuance for people to appreciate that we're not just premiumizing. We're also making the fundamental thing that made Grindr possible back in 2009 and onwards, be a lot better through right now.

Got it. Great. Thank you, guys. Really appreciate you joining us and love the great conversation. Thanks, everyone, for joining.

Thank you.

Enjoy the rest of the day.

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's Second Quarter 2025 Earnings Conference Call. [Operator Instructions]

And I would now like to turn the conference over to Tolu Adeofe, Grinder's Head of Investor Relations. Please go ahead.

Thank you, moderator. Hello, and welcome to the Grindr's Earnings Call for the Second Quarter 2025. Today's call will be led by Grinder's CEO, George Arison; and CFO, Vandana Mehta-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. 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.

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 period of 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 cutely comparable GAAP financial measures 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.

Thanks, Tolu, and hi, everyone. Grindr delivered another strong quarter, the 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 expands how our users engage. This quarter is another proof point that we can deliver on our road map 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. Engagement on 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 the 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 Heatmaps: dynamic, city-level views showing the most active areas across 21 markets. With those things in mind, events reflect historical not live activity to help users search smarter online and in real life. Longer term, maps unlock a powerful surface for the gayborhood, 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, one that creates shareholder value by using Gen AI 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 Gay I, comprised of 3 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 mail image related to values combined and enhance those models, generating insights and capabilities tailored to gay-specific contexts and needs; and an application layer that synthesizes those capabilities into differentiated user experiences.

The architectural area is core to durable advantage. It allows us to run a variety of models to produce custom data sets and structured insights; train AI to understand gay life, cultural norms and male imagery, establish a robust privacy framework and to the 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 this stack, like A-List, while developing other products that match its level of ambition and value. For more detail, I'd encourage you to read the full shareholder. 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 3 years. We announced last week that Vanna has initiated a transition. She is gracious 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 see today, and she has been a great partner to myself and the Grindr team. We are 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 on the future of Grindr, while continuing to deliver strong results. Thank you all for your continued support. I'm excited about the management of the business and what H2 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.

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. And 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 1.7x 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%.

And with that, operator, we'll now take questions.

[Operator Instructions] And your first question comes from the line of John Blackledge of TD Cowen.

It's Logan on for John. First question maybe, 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? And then looking forward, could you comment on Grindr's penetration as you see it right now of the overall TAM in the U.S. and globally at this point? And then I just have one follow-up question as well.

Logan, good to talk to you, and welcome, everybody. On the MAU question, I have 3 things I want to talk about. So bear with me as I go through that. First on kind of how MAU doing overall and 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 MAU Right Now, you're correct, grew 6% quarter year-over-year in Q2. We are very happy with that, and MAU was doing very well this summer as well. We have a very, very healthy MAU 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 well and growing in a very strong way.

So and kind of challenges that people talk about in the 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 it's like to be gay and what your life is like, we are the gayborhood on your phone for people who don't live in gayborhoods in large cities, and that's what people kind of look forward to. So we're really happy with the MAU number as of right now and kind of how it's doing, and I generally don't expect that to change in the future.

Number two, topic on MAU is regarding third-party data. I know that a lot of you have to rely on these data sources for your analysis in mind by you, the analysts and investors. But 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 the methodologies to help them correct the methodology, but they don't want to release what the methodology is, and so it's impossible for us to help them along.

We count MAU 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 tenancies 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 2 people in a given quarter. So we go down to the level of level of device. And so while I totally appreciate the reliance on third-party data, I think the reality is that our numbers speak for themselves, and I think MAU is going very well.

And then lastly, with regards to long term, we do think there's a lot of opportunity for what we can do. Grindr's MAU 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. But we think there are a lot of things we can do to help that along. And I'll talk about 2 buckets, 1 in marketing and 1 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. 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 with itself would really help, especially in places like Asia and Latin America. And that's something we've not done and are working towards putting resources behind.

Additionally, the same brand depth that Grindr faced in the United States 3 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, and we're starting that in 2025, and we'll continue into next year as well.

And then 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 can but not use it as much because Grindr is very general in terms of what its offering is, whereas they want to have more specific intention, whether it's a right now intention, whether it's relationship retention or whether it's something else that travel. 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 us. That mostly the appliance 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 2 ways to think about TAM. You can think of TAM as just number of people that Grindr could bring on board. 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, et cetera, where people are only now starting to come out and become comfortable with their sexualities. And so growth opportunity there with TAM is huge.

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. And our strategy is to both make Grindr the core product really great, but also to build these long-term new businesses like Woodwork and health vertical, where we can sell more things to our users and offer them more services. And so from that point of view, we think the TAM can extend dramatically since obviously, health care alone for our users is a huge opportunity to expand TAM 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 big and growing. So that's on your first question. Happy to answer the third.

Okay. Thanks, George. Yes, on the mapping announcement, it's exciting. Can you just talk more about potential of mapping and what it could mean for maybe other product initiatives and use cases outside of like Right Now or Explorer looking forward?

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

So 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. And then in the Explore function, we show you heat maps in 21 cities where it's really busy. We use historical data, not live data, to protect users' privacy. And that allows us to basically help you to 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, et cetera, I can use that data 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, 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? 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 before that.

So those are the kinds of things that we envision long term, mapping to help with, and we think it will be very valuable. It was in the past, historically, was a compensated technology to enable in the out because of the mobile nature of our app and now technology is in a place where we think we can do it really well. And so we expect that it's out.

Your next question comes from the line of Andrew Boone, Citizens.

This is [ Briana ] on for Andrew. Can you just unpack what drove the acceleration in indirect revenue in the quarter? And then on operating expenses set up this quarter, can you walk us through the key drivers behind that increase? Is this reflective of ongoing investment in product, marketing or headcount? And how should we think about investments going forward? And then I have one more question to that.

Sure. 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. 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 underinvested in for a very long time and was not getting the attention that we believe it needed to kind of take advantage of the full opportunity. We'll have a very desirable user base people that are very much trendsetters for the world in general, not just for our community and their income is higher, they're education is higher as well overall. And so 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 3 years has been primarily driven by third-party advertising. And that part of the business has done exceptionally well. I mean I frankly don't think you could ask about anything more than what they've delivered. The growth numbers have been stunning we've significantly increased the number of ads that we show users because Grindr was showing very few as to users before, while maintaining the CPM where it was in the past, 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. 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. And I would expect rewardable, in particular, to be a big growth lever in 2025 as we -- sorry, 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.

And then lastly, I think 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. And that has to do with direct advertising. So 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. But the categories of verticals that we've added to a brand business or specific companies that have come on board, is much lower than I think many of us had hoped it would be the case today.

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 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. But what happened 2 years ago with an hashed set us back in a pretty significant way. People are -- like brands are worried about advertising.

And I think there, we just need to continue to hammer the point that Grindr has a very desirable audience of trendsetting higher-income welfare men who spend a lot of time on the app, and it's a great way to reach them and do as good of a job in kind of pitching our story to them as I think we've done in other places. And we're not going to give up. We think that there's still a ton of opportunity in the direct business to grow. So 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.

So with that, I'll pass it over to Vanna to talk about expenses.

So yes, you are correct. Our operating expenses are reflecting our investment in our products. As you know, we have a very exhaustive product road map, and we're really excited about everything that we have that we're building for our users. So that is bringing along a little higher cost. We also have some accruals that we put -- that were put into place in Q2. 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. I would say 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.

Got it. 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 are 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?

So I do want to reemphasize that none of the pricing changes or experiments that we might do will be material to this year. And so no one should kind of count on those for 2025. And I think it's really important. Most of our focus for the rest of the 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, and so one of those pieces has to do with experiment with pricing.

Grindr has not raised prices since 2018 for either its XTRA or Unlimited offerings, which today are $19.99 and $39.99. If you just look at inflation from that period of time from 2018 to today, that would push our XTRA price to something like $25.50 and our Unlimited price to $49. In no ways am I suggesting that, that's the level we're going to reach that right away or right now, so please don't assume that. but that would imply that there is a lot of room, just purely on inflation for us to increase prices. And when you couple that with the fact that we've added a ton of new products over the last 4 years, and added a lot of value to the premium tiers, and we think there is some level of opportunity there.

And when I say we've added new products, like we've added a ton of free products or freemium products to the experience like Right Now, but then you get a lot more Right Now if you're a paying user. We've got albums, which are available to everybody, but then you get more album capabilities if you are a paying customer. And then, obviously, 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.

So when we released our 3-year plan, we talked about the fact that there are 2 ways we could that go about reaching our long-term goals. Either one of them could get us there, but obviously, we wanted to do both. #1 was to get more users to pay for Grindr, #2 was to get people who do pay for rented to pay more for all the value-added services and products that they are getting from us. 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.

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. And so 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 Instructions] And there are no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you, everyone, for joining. You may now disconnect.