Grindr Inc. Q3 FY2024 earnings call

• Strong financial and user metrics led to an exceptional third quarter, with revenue growth guidance for the year raised to 29% or greater. - Success of Weekly Unlimited subscription, effective merchandising and paywall optimizations, and strong advertising demand contributed to outperformance. - Product highlights: Right Now expanded to Washington, D.C. metro area with feed feature; Interest tab launched increasing payer conversion and user engagement; Roam live globally; early testing of AI-powered Wingman; resolution of legacy bugs and improvement in app stability. - Operating expenses (excluding cost of revenue) were $38 million in Q3 2024, up 7% year-over-year. Adjusted EBITDA for Q3 2024 was $40 million, equating to a 45% adjusted EBITDA margin.

In the third quarter of 2024, Grindr's total revenue increased by 27% year-over-year to $89 million. Direct revenue grew 25% year-over-year to $77 million, driven by the adoption of the Unlimited Weekly subscription offering and merchandising/paywall optimizations. Indirect revenue grew 43% year-over-year to $12 million, fueled by strong demand in advertising. Average monthly active users increased 8% year-over-year to 14.6 million. Average paying users in the quarter increased 15% year-over-year to 1.11 million, with payer penetration at 7.6% for the quarter. Average direct revenue per paying user increased 8% year-over-year to $23.07.

• Based on year-to-date outperformance, revenue guidance for 2024 is raised to 29% or greater. - Continue to expect adjusted EBITDA margin of 42% or greater. - Updated outlook implies relatively consistent revenue quarter-over-quarter and timing of Q4 investments.

• Forward-looking statements are subject to risks and uncertainties, actual results could differ materially from views expressed. - Risks set forth in earnings release and periodic reports filed with the SEC. - Potential impact of new iOS (e.g., iOS 18) on App Store rankings as mentioned in competitor discussions.

Q: As we think about the road map laid out at Analyst Day, are there opportunities to potentially accelerate investment and accelerate those timelines? How should we think about philosophically as ARPPU performs, average subscribers increase or paying users accelerated this quarter?

A: George Arison said they always aim to exceed, have a plan and a stretch plan, are happy with current product map, Right Now in two markets, Roam live globally, with features in works and more to come beyond public roadmap. Vanna Krantz spoke about ads business having been underinvested, addressed with tech and sales talent, enhanced ad formats including native ads, rewarded video, interstitials.

Q: What are the most exciting things learning about the Right Now product as users start using it? And on new ad formats and monetization within indirect revenue?

A: George Arison said Right Now has features like sorting grid for Right Now mode users, chat feature, with plans to add photo sending in group chat, seeing good reengagement. Vanna Krantz spoke about ads having strong quarter, opened more third-party ad partners, enhanced ad formats including native ads, rewarded video, interstitials.

Q: How are you balancing pricing and merchandising versus keeping a robust free user offering?

A: George Arison said they have a robust free offering, changed how many messages free users could send through Explore from three to one, seeing conversion improvement, believe there are long list of things to do to increase paid tier value while maintaining free offering, continuously invest in free user experience. Vanna Krantz mentioned simple merchandising change of suggesting no ads upsell saw nice conversion into XTRA weekly.

Q: Any evidence that the new iOS may have thrown a wrench into things regarding App Store rankings?

A: George Arison said no noticed changes yet. Vanna Krantz said saw transcript mention but didn't bubble up to them.

Q: On the weekly Unlimited tier, do you see that driving higher payer conversion or existing payers to switch to the tier?

A: Vanna Krantz said conversion rates continuing to increase, cannibalization was very low with the launch of Unlimited weekly, helping drive conversion rates.

Q: Key drivers of sustained MAU growth and any geos that stood out? And on addressing technical debt.

A: Vanna Krantz said MAU growth due to macro level countries being more open, micro level people identifying as fluid, focusing on great user experience including bug fixes and product road map features. George Arison spoke about working on relationship use case to reengage older cohort users, and on technical debt, having done a two-week bug bash, bashed more than 75% of bugs, working through rewriting parts of mobile code base to address technical debt issues.