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.…

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…

[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…

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…

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…

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.…

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