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'll make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon, and this is available on the SEC's website and Grindr's Investor page at investors.grindr.com. Before we begin, I will remind everyone that during this call, we may discuss our outlook 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 terraforming Grindr into an AI-native organization. With 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 clarified intent, including the global expansion of Right Now and launches like For You, Chat Summaries and A-List. We strengthened XTRA 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 agents drove 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 took steps 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 XTRA and Unlimited, significantly expanding what users get from both tiers. To make sure we're capturing the right economics and return, in August, we began rolling out new pricing for XTRA and unlimited. 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…

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, 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…

[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 can chime in if he wants to add anything. So with regards to 2026 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 XTRA and Unlimited over the last 3 to 4 years. 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 had 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, demand 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 for 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's some of the information that got out into the public which was inevitable when you start doing price tests like this, it will attract attention. 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 from the Board, and the Board does continue to view this issue as quite important, and that's something that they've always thought about. I think one of the things that came out from last fall is that everybody is in alignment that Grindr remaining a public company is the best thing to do. 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 Gearon, 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, period. 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 independent 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…

Your next question comes from Nathan Feather with Morgan Stanley.

Congrats on the results here. I guess first, I'm 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 other kind of factors? And then second, really interesting to hear the positive receptivity to the Edge tier. Can you 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 as 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 hadn't really taken a price increase since 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, which 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 direct advertising. 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 upside.

And with regards to Edge, thanks for the question. B, looking forward to seeing you on Monday at the conference. And Edge is something that I'm super excited about because, honestly, I came 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 is awesome because it's built on technology that wasn't in existence 4 years ago. One of my thesis 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, and AI-first product because we have so much data. Like 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 inside 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 user sends 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 conversation you might be having get kind of pushed down and lost in the inbox. And the thing we've been kind of thinking about over the years is how do we avoid that from happening? How do…

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 continuing to sort of evolve the user funnel more broadly described 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 tier, very robust free tier. There are 2 things that make, I think, it 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. 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 paywalls 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 extreme 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 other companies have taken as well…

Your next question comes from Andrew Boone with Citizens.

I wanted to ask about Woodwork. 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 MAU 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 Woodwork. Thanks for asking the question. Woodwork is not at all in our guidance for 2026 from the revenue perspective. It is in there from a 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 one 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 start-up. And I joked, I think, at the Board meeting was if it were a stand-alone company and was in Silicon Valley, it'd be one of the hottest companies in Silicon Valley, given how much scale it's achieved in a very short amount of time with 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 start-up with deep start-up rigor as well as hard corners that start-up companies are run with. And so that's kind…

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 headcount 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 in the letter you called out unwinding paywall dynamics and ad triggers. Could you just 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 them on this point for a lot longer than almost every other 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 flat 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 percentile of companies in tech in terms of how quickly we're adopting to that and how quickly we're terraforming 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 engineers are able to take advantage of these tools even more than anybody else's, making themselves even more valuable because they can do so…

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 the call was worth it and helpful for folks, and we'll aim to do that again in May. Looking forward to seeing you then.